Committee Reports to the 2018 Kansas Legislature

Special Committees; Selected Joint Committees; Other Committees, Commissions, and Task Forces

Kansas Legislative Research Department January 2018 2017 Legislative Coordinating Council

Chairperson

Senator Susan Wagle, President of the Senate

Vice-chairperson

Representative Ron Ryckman, Speaker of the House

Jim Denning, Senate Majority Leader Anthony Hensley, Senate Minority Leader Don Hineman, House Majority Leader Scott Schwab, Speaker Pro Tem Jim Ward, House Minority Leader

Kansas Legislative Research Department 300 SW 10th, Room 68-West, Statehouse Topeka, Kansas 66612-1504

Telephone: (785) 296-3181 FAX: (785) 296-3824 [email protected] http://www.kslegislature.org/klrd Special Committees; Selected Joint Committees; Other Committees, Commissions, and Task Forces

Special Committee on Assessment and Taxation Special Committee on a Comprehensive Response to the School Finance Decision Special Committee on Financial Institutions and Insurance Special Committee on Health Special Committee on Utilities Joint Committee on Corrections and Juvenile Justice Oversight Joint Committee on Information Technology Joint Committee on Kansas Security Legislative Budget Committee Joint Committee on Pensions, Investments and Benefits Robert G. (Bob) Bethell Joint Committee on Home and Community Based Services and KanCare Oversight Joint Committee on State Building Construction Capitol Preservation Committee Child Welfare System Task Force Health Care Stabilization Fund Oversight Committee

Kansas Legislative Research Department 300 SW 10th, Room 68-West, Statehouse Topeka, Kansas 66612-1504

Telephone: (785) 296-3181 FAX: (785) 296-3824 [email protected] http://www.kslegislature.org/klrd Foreword

In the 2017 Interim, the Legislative Coordinating Council appointed eight special committees to study nine study topics. Legislation recommended by the committees will be available in the Documents Room early in the 2018 Session.

Joint committees created by statute met in the 2017 Interim as provided in the statutes specific to each joint committee. Several of the joint committees have reported on their activities, and those reports are contained in this publication. Legislation recommended by these committees will be available in the Documents Room early in the 2018 Session.

This publication also contains reports of other committees, commissions, and task forces that are not special committees created by the Legislative Coordinating Council or joint committees.

Reports of the following are not contained in this publication and will be published in a supplement: Special Committee on Commerce Special Committee on Elections Special Committee on Natural Resources Minutes of the meetings of the special committees, joint committees, other committees, commissions, task forces, and panels are on file in the Division of Legislative Administrative Services. A summary of each reporting entity’s conclusions and recommendations may be found beginning on page i. This publication is available in electronic format at http://www.kslegresearch.org/KLRD- web/Publications.html. TABLE OF CONTENTS

Special Committee on Assessment and Taxation Report...... 1-1 Special Committee on a Comprehensive Response to the School Finance Decision Report...... 2-1 Special Committee on Financial Institutions and Insurance Kansas Uniform Consumer Credit Code...... 3-1 Minimum Motor Vehicle Liability Insurance...... 3-6 Special Committee on Health Report...... 4-1 Special Committee on Utilities Report...... 5-1 Joint Committee on Corrections and Juvenile Justice Oversight Annual Report...... 6-1 Joint Committee on Information Technology Annual Report...... 7-1 Joint Committee on Kansas Security Annual Report...... 8-1 Legislative Budget Committee Annual Report...... 9-1 Joint Committee on Pensions, Investments and Benefits Annual Report...... 10-1 Robert G. (Bob) Bethell Committee on Home and Community Based Services and KanCare Oversight Annual Report...... 11-1 Joint Committee on State Building Construction Annual Report...... 12-1 Capitol Preservation Committee Annual Report...... 13-1 Child Welfare System Task Force Preliminary Report...... 14-1 Health Care Stabilization Fund Oversight Committee Annual Report...... 15-1 Summary of Conclusions and Recommendations

Special Committee on Assessment and Taxation

The Committee made recommendations related to income tax monitoring, property tax limitation mechanisms, agricultural land use valuation, tax incentives, and sales tax collection on remote transactions, as listed below.

Income tax. The Committee recommended the standing assessment and taxation committees continue to monitor individual income tax receipts throughout the remainder of FY 2018 to fully understand the impact of the changes to law made in this area during the 2017 Session.

Property tax limitation mechanisms. The Committee recommended continued examination of property tax limitation mechanisms used by other states and the effects of the current Kansas tax lid, including the assignment of oversight of the tax lid to a single state agency.

Agricultural land use valuation. The Committee recommended further study of the formula used to determine the use value of agricultural land to more closely align land values with current market realities.

Tax incentives. The Committee recommended a more complete disclosure of state and local tax incentives and the consideration of “best practices” recommendations identified by the Legislative Division of Post Audit to inventory and evaluate tax incentives.

Sales tax collection on remote transactions. The Committee recommended consideration of the Massachusetts’ approach for remote sales tax collection and recommended continued participation in various multi-state tax organizations designed to enhance the ability of states to collect sales and use taxes on goods shipped to customers within the state.

Special Committee on a Comprehensive Response to the School Finance Decision

The Committee declined to make recommendations; however, it commends to the Legislature the Committee’s minutes and attachments and this report.

Special Committee on Financial Institutions and Insurance

Kansas Uniform Consumer Credit Code. The Committee made no recommendation relative to 2017 HB 2267 or the introduction of any legislation affecting certain consumer loan transactions regulated under the Kansas Uniform Consumer Credit Code (UCCC). The Committee further noted its discussion on its assigned bill, the UCCC and its present structure, and the update and comments submitted by stakeholders on the small dollar lending Final Rule recently published by the Consumer Financial Protection Bureau (CFPB). The Committee notes concerns regarding the uncertainty of the regulatory role of the CFPB and the timing of modifications to the consumer lending provisions of the UCCC, including any state legislative action, during the prescribed 21-month implementation time period for the Final Rule. The Committee encouraged the Office of the State Bank Commissioner to hold regular stakeholder meetings to assist in drafting potential changes to the UCCC.

Kansas Legislative Research Department i 2017 Interim Committee Reports Minimum motor vehicle liability insurance. The Committee made no recommendation relative to 2017 HB 2104 or the introduction of any legislation that would increase the minimum limits for bodily injury insurance coverage and amend provisions relating to uninsured and underinsured motorist coverage. The Committee further noted its discussion on the bill, information provided on prior legislative consideration of the broader topic of uninsured motorists, and available automobile liability insurance marketplace data and driver data. The Committee encouraged future review of data and analysis, as well as continued stakeholder input.

Special Committee on Health

The Committee noted the importance of keeping the patient first when crafting telemedicine legislation and recommended the introduction of comprehensive telemedicine legislation by the parties, to begin in the House, early in the 2018 Legislative Session. Additionally, the Committee did not recommend the 2017 telemedicine legislation currently residing in the House Committee on Health and Human Services (HB 2206 and HB 2254).

Special Committee on Utilities

The Special Committee on Utilities was not convened during the 2017 Interim.

Joint Committee on Corrections and Juvenile Justice Oversight

The Committee recommended legislative consideration of an appropriation of $1.5 million in each of the next three years for inmate treatment programs; legislation changing how juvenile dispositions are treated with regard to future application of the offender; legislation modifying the SB 123 program; legislation aligning all financial loss crimes with the current threshold of $1,500; delayed approval for construction at the Lansing Correctional Facility; and possible changes to human trafficking laws and to Kansas’ Romeo and Juliet laws. The Committee also recommended the Kansas Sentencing Commission reconvene its proportionality committee and make recommendations based on the category and severity of crimes to the 2018 Joint Committee on Corrections and Juvenile Justice Oversight and the 2019 Legislature. Further, the Committee requested legislation to stay limits on overall case lengths for juvenile offenders who abscond from supervision, allow fees to be assessed as part of applications under the Immediate Intervention Program, make a technical change to the charge of the Juvenile Justice Oversight Committee, and allow a juvenile’s attorney to waive appearance at the 14-day detention review hearing under KSA 2017 Supp. 38-2343.

Joint Committee on Information Technology

The Committee recommended the Office of Information Technology Services (OITS) present a clear roadmap for the process of mandating actions to improve cybersecurity for state agencies, and OITS should ensure the roadmap treats all agencies fairly. The Committee also requests OITS include in its plans the expectation that, if agencies are given the option to take control of their own cybersecurity efforts, agencies be required to consent to a cybersecurity responsibility statement specifying actions necessary to improve cybersecurity within each agency and identify individuals within each agency responsible for oversight of cybersecurity activities. The Committee would like to elevate the importance of the cybersecurity discussion, the importance of preventative action, and the responsibility of the State to protect data entrusted to the State by its citizens and determine how agencies may implement any

Kansas Legislative Research Department ii 2017 Interim Committee Reports changes necessary to improve cybersecurity. The Committee recommended continued investigation into what needs to be accomplished to allow for archiving the livestream of committee hearings held in the Old Supreme Court Room. The Committee believes OITS needs more authority to provide oversight beyond the initial stages of a project and it should be encouraged to develop more tools that will provide better project portfolio management, such as automated reporting tools and software, and work toward better collaboration and integration of systems to avoid duplicative projects. Finally, the Committee suggested a scheduled meeting early in the 2018 Session for consideration of OITS’ proposed roadmap for information technology security and make recommendations for legislative action in the 2018 Session, including discussion on 2017 HB 2331 and 2017 SB 204.

Joint Committee on Kansas Security

The Committee recommended the Secretary of State protect the integrity of Kansas voting machines and protect against hacking; the House Committee on Appropriations and the Senate Committee on Ways and Means consider the Kansas Bureau of Investigation enhancement to fund agent positions, particularly investigation positions, recognizing the need for the Legislature to study Kansas’ overall law enforcement capacity; the House Committee on Appropriations and the Senate Committee on Ways and Means consider authorizing the Kansas Division of Emergency Management to fill a Planner II National Bio and Agro-defense Facility position for FY 2019; and placing the Kansas Department of Agriculture’s Emergency Exercise Plan for biosecurity and the Kansas Agriculture Emergency Response Corps into statute. The Committee requested a bill to add a designated ranking minority member to the Committee.

Legislative Budget Committee

The Committee met four times during the interim. On August 8, 2017, the Committee reviewed the Temporary Assistance for Needy Families Funded Home Visitation Program, re-certification status of the Osawatomie State Hospital (OSH), update on the status of requests for proposal (RFPs) regarding OSH, review for the 2017 pay plan implementation, and an update on correctional facilities. The Committee met on October 5, 2017 for updates on State Fire Marshal Disaster activities, Kansas Department of Transportation bonding, OSH re-certification, KanCare 2.0, Lansing Correctional Facility replacement, the new school finance formula, and selected Kansas Efficiency Study recommendations and agency responses. The Committee met on November 11, 2017, to review the consensus estimates and receive an overview of agency budget requests. The Committee met on December 20, 2017, to review Regents universities efficiency studies, Kansas Public Employees Retirement System Briefing Valuation Report, Office of Information Technology Services update on information technology modernization, a briefing on the Comprehensive Response to School Finance Decision Meeting, the status of the State Employee Health Clinic, and selected agency issue briefings.

Following discussion and review of the topics previously described, the Committee made no recommendations.

Kansas Legislative Research Department iii 2017 Interim Committee Reports Joint Committee on Pensions, Investments and Benefits

The Committee recommended a bill to repeal an obsolete provision that prohibits the Kansas Public Employees Retirement System (KPERS) from investing in Sudan and related reporting requirements to the Committee. The Committee suggested the Legislature consider exempting KPERS from KSA 2017 Supp. 75-3740e and 75-3740f, pertaining to vendors’ policies towards Israel, which may increase operational expenses. The Committee recommended the Legislature consider the extent to which State contributions to KPERS on the behalf of school districts should be counted towards education funding.

Robert G. (Bob) Bethell Joint Committee on Home and Community Based Services and KanCare Oversight

The Committee expressed concerns and adopted recommendations. The Committee recommended KanCare 2.0 proceed as scheduled, the Kansas Department of Health and Environment (KDHE) include comprehensive dental benefits for adults in the KanCare 2.0 request for proposal, and KanCare 2.0 include measures to reduce the waiting lists.

The Committee expressed concerns about the increase in Home and Community Based Services waiting lists.

The Committee further recommended a comprehensive master plan addressing mental health be developed, including corrections; KDHE provide to the Senate Committee on Public Health and Welfare and the House Committee on Health and Human Services, by February 22, 2018, effective criteria and performance measures for the KanCare Clearinghouse and call center; the Kansas Department for Aging and Disability Services develop policies and practices for surveying long-term care facilities that will give surveyors latitude in interpreting deficiencies, provide adequate salaries and thorough training to enhance the work of surveyors, and monitor inspections and provide reports to the Committee regarding citations and fines; KDHE clarify the language regarding power of attorney (POA) documents to distinguish between POA for health care and POA for finances; and the Child Welfare System Task Force review and clarify Medicaid eligibility for children in foster care and consider streamlining eligibility to make the transition out of foster care more consistent and efficient.

The Committee did not propose legislation.

Joint Committee on State Building Construction The Committee recommended all the agencies’ five-year capital improvement plans except for that of the Department of Corrections. The motion to approve the agency’s five-year capital improvement plan made no recommendation on the Lansing construction project for a new correctional facility.

The Committee recommended the Department of Corrections restart the bidding process for the Lansing construction project for a new correctional facility and write the request for proposals to cover design- build proposals.

The Committee also recommended the Department of Corrections bring in stakeholders for the new Lansing Correctional Facility construction project including mental health groups and the Sentencing Commission.

Kansas Legislative Research Department iv 2017 Interim Committee Reports Capitol Preservation Committee

The Committee directed Michael Young, artist, to make updates to the Brown v. Board of Education mural. The Committee recommended the Kansas Department of Administration meet with Mr. Young to discuss and implement lighting of the mural; continue to fix fractures in the marble flooring of the Capitol Visitor Center with epoxy and monitor the flooring; and make several updates to signage around the Capitol Complex. The Committee recommended the State Historical Society closely monitor the cracks in the Overmyer murals and proceed with obtaining cost estimates to stabilize and conserve these murals, as necessary. Further, the Committee recommended the Report of the Capitol Preservation Committee to the 2018 Kansas Legislature be forwarded to the Joint Committee on State Building Construction.

The Committee acknowledged support for the following projects: completion of the Ad Astra Plaza, without providing any state financing for the completion of the project; expansion of the Law Enforcement Memorial on Capitol grounds; enactment of legislation for the Eisenhower statue on Capitol grounds; and development of a Legislative Coordinating Council policy regarding non-controversial artwork in Capitol committee rooms.

Child Welfare System Task Force

The Task Force made the following preliminary recommendations: a multi-year focus on recruitment and retention of social workers should be implemented, including the Department for Children and Families (DCF) evaluation of the morale and tenure of the work force; long-term incentives, supports, career path (advancement), professional development, ongoing training, supervision, student loan forgiveness, and competitive compensation for social workers who work in the child welfare system should be developed; continuity of services and recordkeeping need improvement so that caseworker turnover does not affect delivery of services; problems that have led to the closure of several Psychiatric Residential Treatment Facilities (PRTFs) for children and youth should be addressed so that more PRTFs can be added; DCF should evaluate and explore options for combining stand-alone computer systems into a consolidated system, to respond to the recent audit performed by the Legislative Division of Post Audit and the federal Program Improvement Plan, and such consideration should include availability of federal matching funds and the system implemented by Indiana; DCF should provide the Legislature with a clear recommendation for computer system improvement and the Legislature should provide the funding required for any necessary feasibility study; prompt adoptions after parental rights have been terminated, though improving, need further attention; issues regarding youth who run from placement should be addressed, including evaluation of what facilities could be used for such youth; there should be consideration of preventative services that could be added or increased; DCF should review the evolution and continuum of placements used over the years; and the effect on the child welfare system of the consolidation of juvenile services within the Kansas Department of Corrections should be considered.

Health Care Stabilization Fund Oversight Committee

The Committee considered two items central to its statutory charge: whether this committee should continue its work and whether a second, independent analysis of the Health Care Stabilization Fund (HCSF) is necessary. This oversight committee continues in its belief that the Committee serves a vital role as a link among the HCSF Board of Governors, the health care providers, and the Legislature and should be continued. Additionally, the Committee recognizes the important role and function of the HCSF in providing stability in the professional liability insurance marketplace, which allows for more affordable coverage to health care providers in Kansas. The Committee is satisfied with the actuarial analysis presented and did not request an independent review.

Kansas Legislative Research Department v 2017 Interim Committee Reports The Committee made other recommendations and comments relating to the actuarial report provided and the overall health of the HCSF, including declines in many surcharge rates for providers, conclusion of the reimbursement schedule for administrative expenses associated with self-insurance programs established by 2010 SB 414, contemporary issues of concerns to the Board of Governors and health care providers, and inclusion of a statement regarding the significance of the HCSF and the purpose of and use for this fund.

Kansas Legislative Research Department vi 2017 Interim Committee Reports SPECIAL COMMITTEE

Report of the Special Committee on Assessment and Taxation to the 2018 Kansas Legislature

CHAIRPERSON: Representative Steven Johnson

VICE-CHAIRPERSON: Senator Caryn Tyson

OTHER MEMBERS: Senators Tom Holland and Dan Kerschen; and Representatives Ken Corbet, Tom Sawyer, and Kristey Williams

STUDY TOPIC

Review and Monitor State Revenue Sources and Analyze Implementation of the Tax Lid

● The Committee will review major state revenue sources and changes in state tax policy enacted in recent years; monitor implementation of the new individual income tax law by the Department of Revenue; conduct an overview of the State General Fund finances as it relates to FY 2018 and FY 2019; analyze additional issues involving taxation by local units of government, including implementation of the tax lid; and make any recommendations deemed appropriate to the 2018 Legislature.

December 2017 Special Committee on Assessment and Taxation

REPORT

Conclusions and Recommendations

The Committee notes the final impact on receipts, taxpayers, and the economy of the 2017 individual income tax law changes cannot be fully ascertained until returns have been filed in the spring. The Committee recommends the standing taxation committees continue to look at property tax limitation mechanisms used in other states; oversight, evaluation, and enforcement of the current tax lid be assigned to a single state agency; and additional exemptions to the tax lid be considered for certain costs borne by cities and counties that are outside of their control. The Committee notes three elections on property tax increases have been conducted, with voters approving two and one failing. The Committee recommends further study of the current agricultural land use valuation system to allow changes in valuation to more closely be associated with current market realities. The Committee finds that a more complete disclosure of state and local tax incentives would provide additional accountability and transparency and enable more rigorous cost-benefit analyses and consideration of possible “clawback” legislation. On the issue of collecting tax on sales from remote vendors, the Committee is encouraged by efforts being undertaken by a number of other states and recommends that Kansas continue to participate in all organizations and discussions designed to enhance the collection of taxes on goods shipped to consumers.

Proposed Legislation: None

BACKGROUND those changes had for projected ending balances in FY 2018 and subsequent years. Given the number of changes in state tax policy in recent years (including multiple changes Department of Revenue officials presented in the individual income tax, two increases in the information on the implementation and timing of state sales tax rate, and reimposition of a property certain features associated with the new individual tax lid on certain local units of government), the income tax law, including the promulgation of Legislative Coordinating Council (LCC) received withholding tables that were released over the several requests for interim tax policy studies. As a summer. result, the LCC subsequently approved a broad- based topic generally charging the Committee with Staff distributed information about the history reviewing major revenue sources and some of the of property tax limitations in other states and on policy changes made in recent years. the history of school district property taxes in Kansas.

COMMITTEE ACTIVITIES Another presentation covered the history of the sales tax in Kansas dating back to its The Committee met on December 7-8, 2017, enactment in 1937. and reviewed the charge from the LCC. Department of Revenue officials provided the Staff outlined the latest Consensus Revenue latest data on fiscal notes associated with the Estimates made in November and the implications potential repeal of sales tax exemptions and with

Kansas Legislative Research Department 1-1 2017 Assessment and Taxation extending the tax to a number of currently untaxed evaluating another round of major changes to the services. state and local tax structure. In particular, the Committee wishes to express concern over the Staff explained the new property tax lid that relatively high combined state and local sales tax was effective for budgets set by local units of rate (the eighth highest nationally, according to government over Summer 2017. The Committee one study) and what that means for then held a public hearing on potential changes to competitiveness and the overall health of the the tax lid. Representatives of the Kansas state’s economy. Association of Counties and the League of Kansas Municipalities said enacting 2017 HB 2424 and The Committee is intrigued by the income tax providing additional exemptions would be helpful simplification proposal advanced by the Tax for cities and counties if the tax lid were going to Simple Center and encourages proponents of that be made more workable in the future. idea to continue to work with the Department of Revenue, tax professionals, and the standing Auditor staff from Legislative Division of Post committees. Audit presented the Committee with two recently completed audits: one involving how other states Property Tax Limitation Mechanisms evaluate and inventory tax incentives and a second covering how Kansas treats agricultural land for Relative to ongoing concerns over property property tax purposes. tax burdens, the Committee recommends the standing committees review other statutory and constitutional property tax limitation A representative of the Tax Simple Center told methodologies employed by other states to the Committee Kansas would be better served by determine whether any of those mechanisms adopting a more streamlined individual income tax would be more effective than the current Kansas and suggested he would be willing to work with property tax lid. policymakers to draft a proposal.

Staff covered the 1992 Quill decision by the Current Tax Lid U.S. Supreme Court involving the ability of states The Committee asks the Kansas Association to attempt to tax sales by remote vendors. A of Counties to provide information about 2017 tax representative of the Department of Revenue lid election results to the 2018 Legislature. Such presented the latest information on legislative information should include the costs of the efforts by the states and discussed the status of elections, the amount of additional tax dollars in current litigation that could overturn some of the excess of the lid that were subject to the elections, precedents set in the 1992 case. and what specific projects those additional property taxes were proposed to fund. At the conclusion of the two-day meeting, the Committee directed staff to prepare the final report The Committee notes exceptions to the outlining its conclusions and recommendations to property tax lid were approved by voters in two the 2018 Kansas Legislature. elections and failed in one election in 2017 and recommends such property tax lid election results and information be tracked each year on an CONCLUSIONS AND RECOMMENDATIONS ongoing basis and that those results be reported annually to the standing taxation committees Individual Income Tax Law Changes alongside local sales tax election results. But the Committee also recognizes that, under current law, The Committee notes the final fiscal impact of no single state agency is charged with oversight, the 2017 individual income tax law changes enforcement, or data collection relative to the tax cannot be fully ascertained until returns are filed lid and recommends the 2018 Legislature consider and processed in the spring, nor can the impact on assigning these responsibilities to a specific state taxpayers and subsequent impact on the state’s entity. economy. The Committee states the 2018 Legislature should keep this in mind when

Kansas Legislative Research Department 1-2 2017 Assessment and Taxation Exemptions to the Tax Lid In the name of accountability and transparency, the Committee believes a more A number of costs borne by cities and counties complete disclosure of tax incentives is a under current law are outside the control of necessary first step in weighing whether those governing bodies, and the Committee recommends foregone state and local tax dollars might instead review of additional exemptions from the be put to other uses (including potentially other provisions of the tax lid, including for additional better targeted and more efficient tax incentives). costs associated with employee benefits and for More disclosure also would allow policymakers to payments made for leases to public building consider more rigorous enactment or enforcement commissions. Another issue that could be of “clawback” provisions that would enable the addressed legislatively involves the September 15 public sector to recover resources if incentive requirement for a mail ballot tax lid election that recipients do not adhere to certain requirements or does not appear to be statutorily flexible, and that stipulations. date falls on a Saturday in 2018. (Note: KSA 2016 Supp. 25-433a provides, if September 15 is a The Committee finds that all major state and Sunday, the election shall be the next business local tax incentive programs should be subject to day.) The Committee notes HB 2424 will begin the an annual independent cost-benefit analysis 2018 Session on General Orders in the House and presented to the standing taxation committees. would be an appropriate vehicle to use in continuing discussion of many of these tax lid issues. Finally, the Committee finds the logic of the U.S. Supreme Court compelling in the 1983 decision Regan v. Taxation With Representation of Agricultural Land Use Valuation System Washington, 461 US 540: The Committee acknowledges the current “Both tax exemptions and tax- averaging system for use valuation of agricultural deductibility are a form of subsidy land for property tax purposes was designed to that is administered through the tax provide stability and certainty, but that system can system. A tax exemption has much produce changes in valuation that do not reflect the same effect as a cash grant to current market realities. The Committee the organization of the amount of recommends the 2018 Legislature further examine tax it would have to pay on its possibilities for the formula that might more income.” closely synchronize changes in valuation with changes in prices, including considering the number of years being averaged, and using a This language from the Court equating tax simple average as opposed to a rolling average exemptions and government subsidies, in essence, approach. suggests there is no practical difference between an exemption and an appropriation. As such, the Disclosure of State and Local Tax Committee stated Kansas needs to do a better job Incentives monitoring the utilization of its state tax dollars.

The Committee recommends the standing Collecting Tax on Sales from Remote taxation committees be briefed on the final series Vendors of “best practices” recommendations being developed by the Legislative Division of Post On the issue of collection of sales tax from Audit as of December 15 in the wake of the audit remote vendors, the Committee is encouraged by on how other states inventory and evaluate certain the efforts being undertaken in recent years by tax credits and exemptions. The Committee is many states, including South Dakota, Colorado, especially interested in a rigorous review process and Massachusetts. The Committee is satisfied similar to one used in Indiana, as well as certain with the action taken to date similar to efforts of full disclosure requirements similar to those used Colorado and South Dakota, but recommends in New Mexico. If that review can be supported by consideration of the Massachusetts approach and legislative action, the Committee recommends that possible necessary legislation. Kansas should action to the Legislature. continue to participate in all multi-state

Kansas Legislative Research Department 1-3 2017 Assessment and Taxation organizations and discussions designed to enhance Congressional delegation to enact authorizing the ability of states to collect sales and use taxes federal legislation referenced in that original on taxable goods shipped to consumers. Should decision. Creating a level playing field and the 1992 U.S Supreme Court precedent from Quill providing equity for main street business in not be overturned with a new decision to reflect Kansas is of increasing concern for the state’s marketplace realities of the 21st century, the economic development. Moreover, collection of Committee recommends the Kansas Legislature tax on currently unreported sales would improve continue to encourage members of the Kansas the revenue elasticity of the sales tax and reduce the pressure on other tax sources.

Kansas Legislative Research Department 1-4 2017 Assessment and Taxation SPECIAL COMMITTEE

Report of the Special Committee on a Comprehensive Response to the School Finance Decision to the 2018 Kansas Legislature

CHAIRPERSON: Representative Blaine Finch

VICE-CHAIRPERSON: Senator Molly Baumgardner

OTHER MEMBERS: Senators Jim Denning, Anthony Hensley, Carolyn McGinn, and Rick Wilborn; and Representatives Larry Campbell, Steven Johnson, Ed Trimmer, Troy Waymaster, and Valdenia Winn

STUDY TOPIC

● Review and analyze the recent Gannon v. State decision (402 P.3d 513 (2017));

● Identify the responses available to the Legislature and the consequences of each; and

● Explore options to reduce or eliminate the perpetual cycle of conflict over school finance and end the perennial and recurrent threat of school closures.

January 2018 Special Committee on a Comprehensive Response to the School Finance Decision

REPORT

Conclusions and Recommendations

Following informative hearings and discussion, the Committee declined to make recommendations; however, it commends to the Legislature the testimony provided to the Committee, the minutes of each meeting, this report, and its appendices.

Proposed Legislation: None

BACKGROUND In Gannon IV, the Court held the K-12 public financing system was constitutionally inadequate The Kansas Supreme Court issued its fifth and gave the Legislature an opportunity to bring opinion in Gannon v. State on Monday, October 2, the State’s education financing system into 2017. The Gannon litigation concerns whether the compliance with Article 6, Section 6 of the Kansas Legislature is in compliance with Article 6, Constitution by June 30, 2017. The Legislature Section 6 of the Kansas Constitution, which, in subsequently passed 2017 SB 19, creating the relevant part requires the Legislature to “make Kansas School Equity and Enhancement Act. The suitable provision for finance of the educational Governor signed the bill on June 15, 2017, and it interests of the state.” In Gannon I, the Court became effective on July 1, 2017. reiterated its prior holding that Article 6 contains at least two components: equity and adequacy. The In Gannon V, the Kansas Supreme Court held Court provided the following test for equity: the State has not met its burden of showing SB 19 “School districts must have reasonably equal meets the constitutional requirements for equity access to substantially similar educational and adequacy. The Court retained jurisdiction of opportunity through similar tax effort.” Further, the case and extended to June 30, 2018, the stay of the Court stated adequacy would be achieved its previous mandate that without a when the school finance system is reasonably constitutionally valid school finance system, the calculated to have all Kansas public education system would be void and schools could be closed. students meet or exceed the capacities set out in The Court stated at that time the Court will not “be Rose v. Council for Better Educ., Inc., 790 S.W.2d placed in the position of being complicit actors in 186 (Ky. 1989), including sufficient oral and the continuing deprivation of a constitutionally written communication skills; knowledge of adequate and equitable education owed to economic, social, and political systems; hundreds of thousands of Kansas school children.” understanding of governmental processes; self Additionally, the Court announced briefs on any knowledge and knowledge of one’s mental and legislative remedies are due April 30, 2018, physical wellness; grounding in the arts; training response briefs are due May 10, and oral or preparation for advanced training in either arguments will be conducted May 22. academic or vocational fields; and academic or vocational skills that enable favorable competition At its October 30, 2017, meeting, the in academics or the job market. Legislative Coordinating Council considered a request submitted by Speaker Ron Ryckman to create an 11-member special committee chaired by

Kansas Legislative Research Department 2-1 2017 Special Committee on School Finance a House of Representatives member, with 6 Legislative Research Department (KLRD) members from the House of Representatives (4 followed with additional information on legislative Republicans and 2 Democrats) and 5 members action taken in response to the Gannon litigation, from the Senate (4 Republicans and 1 Democrat). as well as information about education consensus The request emphasized the need to begin work calculations for fiscal years (FYs) 2018 and 2019 immediately given the scope of the issue to be and a five-year profile of the State General Fund addressed and the limited time available. To allow (SGF). A representative of the Kansas State the Legislature to begin work quickly and Department of Education (KSDE) also provided efficiently in January, the request suggested the data to the Committee concerning changes in Committee “act as fact-finders, gather the enrollment, spending for personnel and at-risk necessary information, compile the options programs, the Local Option Budget (LOB), and available to the legislative body, and identify capital outlay. specific matters for the standing committees of both houses.” Standing committees include the In the afternoon, the Committee received House and Senate Education Committees, the information from staff of the Revisor’s Office on House K-12 Education Budget Committee, and the the specific equity and adequacy issues identified Senate Select Committee on Education Finance (if by the Court in Gannon V and from KLRD staff reauthorized). on the potential fiscal impact associated with addressing those issues. The LCC authorized the Committee to meet three days with the specific charge to: Discussion of Equity Issues

● Review and analyze Gannon V; The Court identified four points of inequity in SB 19. First, the Court ruled the expanded use of ● Identify the responses available to the capital outlay funds for utilities and property and Legislature and the consequences of each; casualty insurance would result in unacceptable and levels of wealth-based disparities as a district’s ability to take advantage of this provision is tied to its property wealth. The most direct remedy would ● Explore options to reduce or eliminate the be to repeal these provisions, which would result perpetual cycle of conflict over school in no direct cost to the State. finance and end the perennial and recurrent threat of school closures. Second, the Court ruled the reinstatement of the protest petition and election process to reach the maximum LOB authority of 33.0 percent COMMITTEE ACTIVITIES resulted in inequity as it effectively denied access to the maximum LOB authority for many districts The Committee held meetings on December 4, while other districts are granted that access. The December 18, and December 19, 2017. most direct remedy would be to allow all districts Information provided at the meetings is to reach maximum LOB authority without being summarized below. subject to a protest petition. KSDE estimates allowing districts to reach the maximum LOB December 4 authority of 33.0 percent without the protest petition and election process would increase state Review of Gannon Litigation and Previous obligations for Supplemental General State Aid Legislative Responses (LOB State Aid) by approximately $10.0 million for FY 2019. Combined, all school districts in the The Committee began its work with a State are approximately $87.0 million below the presentation from staff of the Office of Revisor of maximum LOB possible under current law. KSDE Statutes (Revisor’s Office) on the history of school officials do not anticipate allowing all districts to finance litigation in Kansas; the procedural history reach 33.0 percent without the protest petition and of Gannon, which was filed in 2010; SB 19; and election process would result in all districts below the Gannon V opinion. Staff of the Kansas 33.0 percent raising their LOB authority to the

Kansas Legislative Research Department 2-2 2017 Special Committee on School Finance maximum authority due to a variety of factors, adequacy, but did refer to three recommendations including local concerns about property tax levels. for the FY 2019 base aid for student excellence (BASE). First, it referred to the three-judge panel Third, the Court ruled the change to using the recommendation, which included a FY 2019 prior year LOB amount to determine the amount BASE of $5,055. This is an increase of $927 of LOB State Aid a district is entitled to receive above the FY 2019 BASE of $4,128 included in results in inequity as a property-poor district that current law and would result in an additional cost raises its LOB will not receive increased to the State of $635.9 million for FY 2019. Next, equalization aid for the first year of the increased the Court referred to the State Board of Education LOB. The most direct remedy would be to return recommendation, which recommended a FY 2019 to using the current year LOB amount to BASE of $5,090. This is an increase of $962 determine LOB State Aid. The November 2017 above the FY 2019 BASE of $4,128 included in Consensus Revenue Estimates included savings of current law and would result in an additional cost $26.4 million in FY 2018 and $8.2 million for FY to the State of $659.9 million for FY 2019. Finally, 2019 due to reduced LOB State Aid payments as the Court referred to the Plaintiff’s the SB 19 appropriation for LOB State Aid was recommendation, which recommended a FY 2019 based on current year LOB authority, not the BASE of $6,539. This is an increase of $2,411 change to prior year LOB authority. Returning to above the FY 2019 BASE of $4,128 included in current year LOB would eliminate the FY 2019 current law and would result in an additional cost savings. Additionally, Committee members to the State of $1.65 billion for FY 2019. discussed the possibility of legislation that would require districts to provide notice to the KSDE by The Committee discussed these issues, as well a date certain if they were going to increase their as potential responses, and requested information LOB, which would also give the Legislature notice needed to better understand how to proceed, of the need for additional equalization dollars. including information on revenue and budget adjustment scenarios that may be required if Fourth, the Court ruled the 10.0 percent floor additional funding was appropriated for K-12 for the at-risk weighting violated the equity education. requirement as only two school districts benefit from this provision, and the State did not December 18 demonstrate why the free-meals proxy used for the at-risk weighting was inappropriate for those two Presentation of Follow-up Information districts but appropriate for all other districts. The most direct remedy would be to repeal this The Committee received information from provision, which would save the State KLRD staff and KSDE in response to questions approximately $2.2 million. asked at the December 4 meeting. Information provided included the legislative history of the The Committee discussed these issues, as well LOB cap; the process school districts used in as potential responses, and requested the following pursuing LOB authority of 33.0 percent; the cost if information from the KSDE: the number of all districts were required to hold elections to students in the Blue Valley and DeSoto school increase their LOB; districts’ balances and use of districts receiving at-risk services and the number capital outlay funds; summaries of Parents as of students in those districts eligible for free Teachers, the four-year-old at-risk program, and meals; the process each district used in pursuing the at-risk program; data concerning all-day LOB authority of 33.0 percent; and information on kindergarten; further explanation of the results of a the extent to which districts were using capital recent survey concerning how school districts outlay funds for utility expenses and property and would use additional funds; historic data on casualty insurance. student performance and numbers of teachers; and headcount data for virtual, out-of-state, and free- Discussion of Adequacy Issues lunch eligible students and students receiving at- risk services. The Court explicitly declined to provide a specific minimum amount to reach constitutional

Kansas Legislative Research Department 2-3 2017 Special Committee on School Finance Discussion of Gannon v. State litigation work” to meet the burden for adequacy, the Legislature should demonstrate why, how, and Arthur S. Chalmers, attorney for the State in how much performance will improve with the the Gannon v. State litigation, also appeared funding provided, and agreed outside expertise before the Committee to answer questions about may be needed to establish the validity of the the case presented to the three-judge panel and the methodology relied upon. In showing the validity Supreme Court, as well as the Supreme Court’s of phasing in funding, the conferee agreed the opinion in Gannon V. The conferee declined to Court may be more responsive to this argument if identify a “safe harbor” for equity or adequacy, but presented with evidence from school boards or agreed the Court found the Legislature to be in other reliable sources that the total amount of compliance with the equity standard prior to the funding could not immediately be put to use. changes made in SB 19. Further, in response to a question about how the State can demonstrate When asked about the timeline for formulating adequate funding without relying on outputs, such a response, the conferee advised the Committee as improved test scores and graduation rates, that given the April 30 briefing deadline, ideally which will not be immediately available, the the Legislature will have concluded its work by conferee referred to Gannon IV. March 1 to ensure sufficient time for the bill to be enacted and for the Attorney General’s Office to In Gannon IV, the Court stated “[t]here is no compile necessary documents. one specific way for this funding to be achieved”; parted company with the three-judge panel to the Presentation on Revenue and Budget extent it would limit the State to a particular Adjustment Scenarios system or structure or refuse to consider sources of funding other than those calculated through the KLRD Staff provided information on revenue Base State Aid Per Pupil; and rejected “any litmus and budget adjustment scenarios that may be test that relies on specific funding levels to reach required if additional funding was appropriated for constitutional compliance” (Gannon v. State, 305 K-12 education. (For a summary of this Kan. 850, 916-17 (2017)). Further, the Court information, see Appendix I.) Additionally, stated that while the cost studies are estimates of representatives of selected state agencies appeared spending, they represent evaluations that the Court before the Committee and spoke to the potential cannot simply disregard, and the State should not impact of an 18.0 percent across-the-board ignore them in creating a remedy. (Id. at 917.) The reduction of SGF appropriations in FY 2019, Court advised that while considering cures, the which, if K-12 education were excluded, would Legislature should also be mindful of the total around $600 million. connection between equity and adequacy. (Id.) Further, the Court emphasized that the adequacy The Kansas Department of Corrections test is one of minimal standards, and “whether the (KDOC) indicated an 18.0 percent reduction legislature satisfies the test by exceeding the Rose would be a reduction of $65.6 million. As many of standards is up to that deliberative body—and the agency’s costs are fixed in relation to the ultimately the people of Kansas who elect its offender population, KDOC stated this reduction members to office” (305 Kan. at 917-18). the would require a reduction in the average daily conferee stated the Legislative Division of Post population (ADP) of offenders through a change in Audit (LPA) cost study looked at the results of sentencing laws and the early release of offenders. math and reading tests that were paired with KDOC prepared the following 3 options for standards no longer in place, and he questioned consideration: closure of 3 correctional facilities, whether those outputs were still appropriate to reducing ADP by 2,503; elimination of all measure adequacy. The conferee indicated that community corrections funding and closure of 2 whatever the measure, the Legislature must correctional facilities, reducing ADP by 1,730; or persuade the Court it is “moving the ball along” elimination of parole services and community toward meeting the minimal standards in Rose. corrections funding and closure of 1 correctional facility, reducing ADP by 1,082. In response to further questioning, the conferee stated his opinion that in “showing its

Kansas Legislative Research Department 2-4 2017 Special Committee on School Finance The Kansas Judicial Branch indicated an 18.0 Organizations and the Aging and Disability percent reduction would be a reduction of $18.5 Resource Center, which screens individuals for million. Because 94.0 percent of the Judicial three of the Medicaid waivers, as well as Meals on Branch budget is dedicated to personnel costs, the Wheels and other nutrition programs for older reduction would result in approximately 70 adults. KDADS indicated this reduction would working days of court closures across the state, also impact KanCare/Medicaid programs and depending on turnover savings and fluctuating services by reducing provider rates and numbers docket fee revenues. The Judicial Branch stated of individuals served both in long-term care and layoffs or hiring freezes are not options as it on the seven Medicaid disability waivers; result in already has approximately 120 vacancies due to accumulation of a waiting list for all Home and previous years’ budget cuts and high employee Community Based Services waivers; and turnover. potentially impact the number of providers willing to care for KanCare participants. Finally, The Kansas Department of Health and reductions to the agency would require staff Environment (KDHE) described how an 18.0 reductions that would impact oversight of the percent reduction of SGF funding would impact agency’s behavioral health and longer term care the agency; however, the agency indicated a services. detailed review of all relevant state and federal statutes and regulations would be necessary to Reductions would also impact KDADS- determine the extent to which the loss of State administered state hospitals and institutions. The match funds could result in the loss of additional budget for Kansas Neurological Institute would be federal funds. An 18.0 percent reduction would reduced by $1.7 million, including loss of 44.0 remove: $645,009 from Administration, which FTEs, closure of 3 homes, and impact to 23 KDHE estimates as 24.5 of 98 funded positions; residents. The budget for Larned State Hospital $3.1 million from the Division of Public Health, would be reduced by $10.4 million, including loss which KDHE indicates would eliminate or of 111.0 FTEs and 8.0 non-FTEs, closure of 1 unit significantly reduce programs and services; from the State Security program impacting 20 $720,158 from the Division of Environment, inmates, closure of 2 units from the psychiatric which KDHE explains would result in the services program impacting 60 residents, closure elimination of testing for parasites, chlamydia, and of 1 reintegration facility from the Sexual Predator gonorrhea and reduce resources in the spill Treatment Program impacting 16 residents, and response program, asbestos program, and reduction of contract services currently provided concentrated animal feeding operations; and for patient care safety, and treatment. The budget $112.8 million from the Division of Health Care for Osawatomie State Hospital (OSH) would be Finance (DHCF), which would impact Medicaid, reduced by $3.3 million, including loss of 30.0 the Children’s Health Insurance Program, medical FTEs and elimination of 13-23 beds depending on assistance for optional services and optional whether they are eliminated on the licensed (OSH) populations, school-based services, and DHCF or certified side (Adair Acute Care). The budget administrative services. for Parsons State Hospital would be reduced by $2.1 million, including a loss of 64.0 FTEs, The Kansas Department for Aging and closure of 4 cottages, consolidation of remaining Disability Services (KDADS) indicated an 18.0 residents, and the move or transfer of 75 residents percent reduction would be a reduction of $136.8 against the will of their parents or guardians to million to the agency and would result in a other locations. reduction to State-funded programs, including the Senior Care Act, Intellectual/Developmentally The Kansas Department for Children and Disabled State Aid Services, and mental health Families (DCF) indicated an 18.0 percent grants and services. Further, some programs and reduction would remove over $47 million with a services are partially funded by the federal larger potential impact to total funding depending government, with receipt of federal funds on specific programs reduced or eliminated. The contingent on state participation. Consequently, agency identified 22 actions that would be loss of state funds could result in loss of federal required to address this loss of funding, including: funds for Community Developmental Disability closure of 8 DCF service centers; elimination of

Kansas Legislative Research Department 2-5 2017 Special Committee on School Finance Family/Community Services prevention grants in recommended the following language for Article Prevention and Protection Services (PPS), the 6, Section 6, which has been the focus of the Economic and Employment Services Food Gannon litigation: “The legislature may make Distribution program, the Head Start Collaboration provision for finance of educational and scientific program, Child Care and Development Fund activity by (1) transfer of funds . . ., (2) creation of matching, the Faith-Based Community Initiatives special corporate entities . . ., (3) pooling of public program, the Human Trafficking program, Adult and private funds . . ., and (4) any other method Protective Services grants, the Foster Care Federal not prohibited by the constitution.” According to Disability Advocacy contract, Foster Care and the Council’s report to the Legislature, the Family Services grants to 4 tribes, and the Chafee recommended language was intended to provide Independent Living program; elimination of SGF “considerable flexibility in taking whatever in the Family Preservation Program; reinstatement appropriate action might be necessary in financing of the 4.0 percent collection fee for Child Support educational programs.” The constitutional Services; reduction of foster care contracts by 12.0 amendment was introduced with different percent, which could impact services and language, the same language that currently exists; placement and result in longer stays in foster care; however, the legislative record does not provide an reduction to PPS Family Services prevention explanation for this change. assistance not needed to meet federal matching requirements; reduction of funding to other The Committee also received information operating expenses, strategic development, from the Revisor’s Office staff on previous Kansas vocational rehabilitation and information legislation addressing school finance litigation, technology; increase in salary shrinkage; and which were categorized as: barring courts from discontinuation of Adoption Support and exercising jurisdiction over claims of Article 6 Permanent Custodianship programs for future violations; modifying the rules and practices of cases. civil procedure as they apply to claims of Article 6 violations; prohibiting the expenditure of public The Kansas Board of Regents indicated an moneys to finance the litigation of claims of 18.0 percent reduction would remove over $136 Article 6 violations; amending the phrase “make million from the postsecondary system, which suitable provision for finance of the educational would particularly impact Kansans’ access to interests of the state”; granting the constitutional postsecondary education, Kansas’ employers’ power of appropriation exclusively to the workforce needs, and the system’s ability to Legislature; or prohibiting the closure of schools compete for students against other states, as a remedy for violations of Article 6. particularly in the regional market. Revisor’s Office staff also summarized other December 19 states’ constitutional provisions governing K-12 school finance. The Committee received information from the Revisor’s Office staff on the history of Article 6 of The Attorney General appeared before the the Kansas Constitution, which was adopted in Committee to discuss school finance litigation 1966. The 1965 Legislature directed the Kansas trends in the United States and the Gannon Legislative Council (today’s Legislative litigation. He reiterated the recommended date of Coordinating Council) to study Article 6. As a March 1 for the Legislature to have completed its result, the Council appointed an 11-member substantive response, which the conferee had Education Advisory Committee. After receiving provided in his testimony to the Committee. He the Advisory Committee’s report, the Council elaborated that such a deadline was prudent as it issued its own report recommending a proposed takes some time for legislation to be enrolled and amendment rewriting Article 6. The Council gave signed, and once enacted, the Office of the primary credit to the Advisory Committee for the Attorney General must then collect pieces of the development of the proposed revision to Article 6 record, develop arguments, and consult with and stated it “borrowed extensively from the legislative counsel by April 30. As an “extreme” material in the advisory committee’s report in example, the Attorney General indicated that in the preparing the text of this report.” The Council last round of briefing, attorneys could not get a

Kansas Legislative Research Department 2-6 2017 Special Committee on School Finance copy of an essential legislative document until the recommendations; however, it commends to the day before the brief was due. Legislature the testimony provided to the Committee, the minutes of each meeting, this On the issue of the Committee’s charge to report, and its appendices. These documents “reduce or eliminate the perpetual cycle of conflict include possible options available. Additionally, over school finance and end the perennial and Chairperson Finch allowed members to request recurrent threat of school closures,” the Attorney information to be provided as appendices to this General suggested a broader substantive report. conversation to address issues such as: who may bring a constitutional challenge to school funding; Noting the Committee had not discussed in what court the challenge should be brought; potential cost savings related to merger or what duties are included within the term “suitable” consolidation of school districts, Senator Wilborn (i.e., equity and adequacy exclusively or others); requested information on that topic be provided whether equity and adequacy are the appropriate (executive summary is Appendix II; full report is tests; whether there should be constitutional available at http://www.ksde.org/Portals/0/School timelines on school finance litigation; the standard Finance/budget/Legal_Max/sdbs--Final Complete of review courts should use in reviewing school Report.pdf). funding decisions by the Legislature; remedies the Supreme Court may use if it finds school funding Senator McGinn asked for information on laws are unconstitutional; the consequences for the expenditures and services provided by other state Legislature if it violates a court order on school agencies to K-12 education since 2008 (Appendix funding; how “adequacy” of funding should be III). determined; and who should be allowed or required to participate in school finance litigation. Senator Baumgardner asked for LPA’s recent performance audit titled “K-12 Education: Evaluating Transportation Services Funding” to be CONCLUSIONS AND RECOMMENDATIONS attached to this report (Report Highlights are Appendix IV; full report is available at Following informative hearings and http://www.kslpa.org/assets/files/reports/r-17- discussion, the Committee declined to make 020.pdf).

Kansas Legislative Research Department 2-7 2017 Special Committee on School Finance APPENDIX I Summary of KLRD Information on Revenue and Budget Adjustment Scenarios

The following table displays cost estimates of various per pupil amounts discussed by the Kansas Supreme Court in its October 2, 2017, decision in the Gannon school finance litigation.

Current Approved Additional FY 2019 FY 2019 Cost BASE BASE Difference to the State Plaintiff Recommendation $ 6,539 $ 4,128 $ 2,411 $ 1,653.9 million KSBE Recommendation 5,090 4,128 962 659.9 million Three-Judge Panel Recommendation 5,055 4,128 927 635.9 million

The following table displays across the board State General Fund reduction options.

FY 2019 State General Fund Across the Board Reductions Percent of All Spending Amount of Percent of All Spending Percent of All Spending Excluding K-12 Reduced Excluding K-12 Excluding K-12 Education Education, Debt Service, Spending to Be Education and Debt Service and Human Service Achieved Caseloads $200 million 6.0% 6.3% 9.2% $400 million 12.0% 12.5% 18.3% $600 million 18.0% 18.8% 27.5%

The table below displays selected revenue generation options.

Sample Fiscal Notes for Selected Tax Law Changes ($ in millions)

Individual Income Sales/Use Tax USD General Fund USD General Fund Tax Increase of Increase from 6.5% Levy from 20 to 21 Levy Repeal $20,000 0.1% in all to 6.6 %, effective mills, effective tax Homestead brackets, effective July 1, 2018 year 2018 Exemption tax year 2018

FY 2019 46.674 32.540 44.097 85.143 FY 2020 51.885 34.797 45.629 66.686 FY 2021 52.871 36.125 45.787 67.820 FY 2022 53.876 37.405 45.946 68.973 FY 2023 54.889 38.684 46.104 70.145 5-yr total 260.210 179.551 227.563 358.767

Kansas Legislative Research Department 2-8 2017 Special Committee on School Finance APPENDIX II Summary of KLRD Information on Revenue and Budget Appendix II Adjustment Scenarios

The following table displays cost estimates of various per pupil amounts discussed by the Kansas Supreme Court in its October 2, 2017, decision in the Gannon school finance litigation.

Current A Comprehensive Study on the Organization of Approved Additional FY 2019 FY 2019 Cost Kansas School Districts BASE BASE Difference to the State Plaintiff Recommendation $ 6,539 $ 4,128 $ 2,411 $ 1,653.9 million KSBE Recommendation 5,090 4,128 962 659.9 million Three-Judge Panel Recommendation 5,055 4,128 927 635.9 million

The following table displays across the board State General Fund reduction options. Prepared for The Kansas State Board of Education FY 2019 State General Fund Across the Board Reductions in response to Percent of All Spending Amount of RFP Number 00241 Percent of All Spending Percent of All Spending Excluding K-12 Reduced Excluding K-12 Excluding K-12 Education Education, Debt Service, Spending to Be Education and Debt Service and Human Service Achieved Caseloads $200 million 6.0% 6.3% 9.2% $400 million 12.0% 12.5% 18.3% by $600 million 18.0% 18.8% 27.5% Augenblick & Myers, Inc.

The table below displays selected revenue generation options. Dr. John Augenblick, John Myers, and Justin Silverstein

Sample Fiscal Notes for Selected Tax Law Changes ($ in millions)

Individual Income Sales/Use Tax USD General Fund USD General Fund Tax Increase of Increase from 6.5% Levy from 20 to 21 Levy Repeal $20,000 0.1% in all to 6.6 %, effective mills, effective tax Homestead brackets, effective July 1, 2018 year 2018 Exemption tax year 2018

FY 2019 46.674 32.540 44.097 85.143 FY 2020 51.885 34.797 45.629 66.686 FY 2021 52.871 36.125 45.787 67.820 January 10, 2001 FY 2022 53.876 37.405 45.946 68.973 FY 2023 54.889 38.684 46.104 70.145 5-yr total 260.210 179.551 227.563 358.767

Kansas Legislative Research Department 2-9 2017 Special Committee on School Finance EXECUTIVE SUMMARY

In October 1999, Augenblick & Myers, Inc. (A&M), a Denver-based consulting firm that works with state policy makers on education finance and governance issues, was selected by the Kansas State Board of Education to conduct a study of school district organization. The study was mandated by the Kansas Legislature in Section 10, 1999 Senate Bill 171.

A&M created an advisory panel for the study, consisting of Dr. Richard King of the University of Northern Colorado, Dr. Chris Pipho, formerly with the Education Commission of the States, Dr. Paul Nachtigal, former director of the Rural Challenge, and Mr. Terry Whitney, formerly with the National Conference of State Legislatures. We then undertook five key tasks.

1. We completed a review of the literature related to school district reorganization.

2. We developed two approaches to selecting “target” districts that might benefit from reorganization.

3. We conducted on-site visits and interviews with representatives of 64 school districts located throughout the state.

4. We developed three alternative ways to reorganize school districts.

5. We identified areas where statutory changes would be needed to implement our recommendations.

School districts are important governmental entities in this country. At the discretion of the states, most of them have been delegated the authority to levy taxes, incur bonded indebtedness, hire key employees, and set curriculum. Kansas, like the other states, determines how many school districts shall exist and where their boundaries shall be. Over time, the number of school districts has decreased dramatically from over 120,000 nationally, to fewer than 15,000, and from over 9,000 in Kansas, to 304. The importance of their boundaries has also diminished somewhat, particularly in states such as Kansas that have modified their school finance procedures so that the wealth of each district is far less critical in determining that district’s total revenue and property tax rates. This is also true in states that have promoted open enrollment (so that pupils can enroll in schools in districts other than the one in which they reside). Kansas currently has 1.00% of the nation’s pupils, 1.62% of the nation’s schools, and 2.10% of the nation’s school districts.

While the states have delegated certain powers to school districts, they maintain both a constitutional responsibility to provide adequate and equitable education services and an interest in assuring that pupils achieve certain education objectives. A state’s economic and democratic future hinges on whether such objectives are met. Because

i

Kansas Legislative Research Department 2-10 2017 Special Committee on School Finance EXECUTIVE SUMMARY the state pays for a significant portion of educational services, it also has an interest in assuring that the cost of providing these services is reasonable. These days, a state’s interest in elementary and secondary education primarily reflects its interest in pupil In October 1999, Augenblick & Myers, Inc. (A&M), a Denver-based consulting performance and per pupil spending. Little else justifies changing school district firm that works with state policy makers on education finance and governance issues, boundaries. was selected by the Kansas State Board of Education to conduct a study of school district organization. The study was mandated by the Kansas Legislature in Section 10, The literature about school district reorganization is rather thin, consisting mostly 1999 Senate Bill 171. of economic studies of school and school district optimum size, and the arguments that are made for and against changing the numbers of school districts in a state. While the A&M created an advisory panel for the study, consisting of Dr. Richard King of literature is less than definitive about school and school district size, there has long the University of Northern Colorado, Dr. Chris Pipho, formerly with the Education been the view that schools, particularly high schools, need to be large enough to Commission of the States, Dr. Paul Nachtigal, former director of the Rural Challenge, provide an adequate array of academic services and extra-curricular activities. More and Mr. Terry Whitney, formerly with the National Conference of State Legislatures. We recently, there are those who advise that schools be small enough to assure a safe, then undertook five key tasks. nurturing environment and that school districts are not so large that they become unmanageable. While technology facilitates the provision of broader opportunities in 1. We completed a review of the literature related to school district small, isolated schools, there is little evidence that it can fully substitute for the hands-on reorganization. presence of well-trained adults. And while evidence exists that some graduates of small high schools go on to become very successful, that evidence tends to focus on very few 2. We developed two approaches to selecting “target” districts that might people, much the same way large schools publicize a small number of pupils who benefit from reorganization. become Merit Scholars.

3. We conducted on-site visits and interviews with representatives of 64 A&M used two basic approaches to identify “target” school districts that might school districts located throughout the state. benefit from reorganization. The first approach focuses on districts with relatively low levels of pupil performance and relatively high levels of per pupil spending. We used a 4. We developed three alternative ways to reorganize school districts. statistical technique, regression analysis, to predict both expected levels of pupil performance (based on combining 1998 composite reading, math, and writing scores for 5. We identified areas where statutory changes would be needed to Kansas statewide achievement tests) and expected levels of per pupil spending (for implement our recommendations. instruction, administration, and plant maintenance and operation). Some people suggested that the use of the tests was inappropriate. Because our purpose was to School districts are important governmental entities in this country. At the focus only on some districts, the tests provide the only basis for evaluating the relative discretion of the states, most of them have been delegated the authority to levy taxes, performance of school districts, and the information is already being used to hold incur bonded indebtedness, hire key employees, and set curriculum. Kansas, like the districts accountable, we feel that it is appropriate to use them as the basis of identifying other states, determines how many school districts shall exist and where their those school districts where state action might be required. While there are many other boundaries shall be. Over time, the number of school districts has decreased kinds of information that individual districts use to evaluate their own performance, none dramatically from over 120,000 nationally, to fewer than 15,000, and from over 9,000 in provide comparable information for all districts. We used per pupil spending as the Kansas, to 304. The importance of their boundaries has also diminished somewhat, basis for evaluating relative spending levels. Some people suggested that, since the particularly in states such as Kansas that have modified their school finance procedures state controls the level of spending of school districts, and no district exceeds the level so that the wealth of each district is far less critical in determining that district’s total specified by the state, it is logically impossible to identify high spending districts. Our revenue and property tax rates. This is also true in states that have promoted open feeling is that, given the variation in spending that exists, some districts may be enrollment (so that pupils can enroll in schools in districts other than the one in which spending more than necessary relative to the spending of other districts. The state’s they reside). Kansas currently has 1.00% of the nation’s pupils, 1.62% of the nation’s formula for distributing state aid may also permit higher spending than is necessary. schools, and 2.10% of the nation’s school districts. Using regression analysis allows us to see how pupil performance and per pupil While the states have delegated certain powers to school districts, they maintain spending are influenced by the proportion of pupils eligible for free and reduced price both a constitutional responsibility to provide adequate and equitable education services lunches and the wealth or enrollment level of a school district. The regression and an interest in assuring that pupils achieve certain education objectives. A state’s equations accounted for 73 percent of the variation in per pupil performance and 80 economic and democratic future hinges on whether such objectives are met. Because i ii

Kansas Legislative Research Department 2-11 2017 Special Committee on School Finance percent of the variation in per pupil spending. Given that those levels are high but not perfect, we established confidence intervals around predicted levels of performance and spending to be sure that appropriate districts were identified as being low in performance or high in spending. Based on our analysis, we identified 28 districts that had a combination of low pupil performance and high per pupil spending. They are listed below in three categories.

Districts that have low pupil performance and high per pupil spending based on regression results: Moscow Public Schools (209), West Solomon Valley Public Schools (213), Elkhart (218), Washington Schools (222), Hanston (228), Nes Tre La Go (301), Belle Plaine (357), Chase-Raymond (401), Hillcrest Rural Schools (455), and Udall (463).

Districts with higher than expected per pupil spending and lower than average pupil performance for two years: Fowler (225), Triplains (275), Elk Valley (283), Cedar Vale (285), Herndon (317), Eastern Heights (324), Wathena (406), and Chetopa (505).

Districts with lower than expected pupil performance in 1998, lower than average performance in 1997, and per pupil spending above the predicted level excluding the use of the confidence interval: Turner-Kansas City (202), Bonner Springs (204), Mankato (278), Pleasanton (344), Oxford (358), Caldwell (360), Marysville (364), Madison-Virgil (386), Neodesha (461), and South Haven (509).

The second approach to identify districts that might benefit from reorganization focuses on districts that are either too small or too large, given what researchers and practitioners believe, to offer an appropriate curriculum, extra-curricular opportunities, and a safe, nurturing environment. This approach assumes that a high school should serve between 100 and 900 pupils and that a district should have an enrollment of at least 260 pupils per high school but no more than 2,925 pupils per high school in order to be at those levels. Looking at the total enrollment of school districts and the number of high schools they operate, we found 50 districts that are too small and 24 districts that are too large based on these guidelines. We also identified two districts as being so large that they might need to be reorganized by breaking them into smaller, more manageable districts. These 76 districts have been grouped into four categories and listed below.

Districts that are too small with only one high school: Cheylin (103), White Rock (104), Moscow Public Schools (209), Northern Valley (212), West Solomon Valley Schools (213), Rolla (217), Ashland (220), North Central (221), Fowler (225), Hanston (228), West Smith County (238), Weskan (242), Palco (269), Triplains (275), Jewell (279), West Graham-Morland (280), Elk Valley (283), Cedar Vale (286), Grinnell Public Schools (291), Wheatland (292), Prairie Heights (295), Sylvan Grove (299), Nes Tre La Go (301), Smoky Hill (302), Bazine (304), Brewster (314), Golden Plains (316), Herndon (317), Eastern

iii

Kansas Legislative Research Department 2-12 2017 Special Committee on School Finance percent of the variation in per pupil spending. Given that those levels are high but not Heights (324), Logan (326), Burrton (369), Montezuma (371), Hamilton (390), perfect, we established confidence intervals around predicted levels of performance and Paradise (399), Chase-Raymond (401), Mullinville (424), Midway Schools (433), spending to be sure that appropriate districts were identified as being low in Hillcrest Public Schools (455), Healy Public Schools (468), Dexter (471), performance or high in spending. Based on our analysis, we identified 28 districts that Haviland (474), Copeland (476), Pawnee Heights (496), Lewis (502), and Attica had a combination of low pupil performance and high per pupil spending. They are (511). listed below in three categories. Districts that are too small with more than one high school: Barnes (223), Leroy- Districts that have low pupil performance and high per pupil spending based on Gridley (245), Southern Cloud (334), Rural Vista (481), and Axtell (488). regression results: Moscow Public Schools (209), West Solomon Valley Public Schools (213), Elkhart (218), Washington Schools (222), Hanston (228), Nes Tre Districts that are too large relative to the number of high schools they operate: La Go (301), Belle Plaine (357), Chase-Raymond (401), Hillcrest Rural Schools Turner-Kansas City (202), Blue Valley (229), Olathe (233), Emporia (253), Derby (455), and Udall (463). (260), Haysville (261), Goddard (265), Maize (266), Salina (305), Hutchinson Public Schools (308), Seaman (345), Newton (373), Manhattan (383), Great Districts with higher than expected per pupil spending and lower than average Bend (428), Auburn Washburn (437), Dodge City (443), Leavenworth (453), pupil performance for two years: Fowler (225), Triplains (275), Elk Valley (283), Garden City (457), Geary County Schools (475), Liberal (480), Hays (489), Cedar Vale (285), Herndon (317), Eastern Heights (324), Wathena (406), and Lawrence (497), and Kansas City (500). Chetopa (505). Districts that are too large: Wichita (259) and Shawnee Mission Public Schools Districts with lower than expected pupil performance in 1998, lower than average (512). performance in 1997, and per pupil spending above the predicted level excluding the use of the confidence interval: Turner-Kansas City (202), Bonner Springs Some of the most important activities we undertook in this study were the on-site (204), Mankato (278), Pleasanton (344), Oxford (358), Caldwell (360), Marysville visits to a large number of school districts where we interviewed many district (364), Madison-Virgil (386), Neodesha (461), and South Haven (509). representatives. We did this not only because it was required by contract, but also to better understand the dynamics within the districts we identified as targets and in their neighboring districts, which might also be involved in reorganization. We used several The second approach to identify districts that might benefit from reorganization criteria to select districts for on-site visits or interviews. First, every one of the 28 focuses on districts that are either too small or too large, given what researchers and districts we identified using the first approach described above was placed on the list. practitioners believe, to offer an appropriate curriculum, extra-curricular opportunities, Second, we selected some neighboring districts of those 28 target districts. Third, we and a safe, nurturing environment. This approach assumes that a high school should obtained additional information about 90 school districts, including the age of their serve between 100 and 900 pupils and that a district should have an enrollment of at buildings and enrollment projections, and selected some districts based on those least 260 pupils per high school but no more than 2,925 pupils per high school in order factors. Finally, we selected some districts based on being too large, using the second to be at those levels. Looking at the total enrollment of school districts and the number approach to identify target districts described above. In all, we had contact with 64 of high schools they operate, we found 50 districts that are too small and 24 districts districts. that are too large based on these guidelines. We also identified two districts as being so large that they might need to be reorganized by breaking them into smaller, more We learned a number of things from our on-site visits and interviews: (1) there is manageable districts. These 76 districts have been grouped into four categories and substantial resistance to consolidation because of historical, cultural and financial listed below. reasons; (2) there is support for state reorganization in extreme cases, where there are declining enrollments and high spending; (3) district officials justified and defended low Districts that are too small with only one high school: Cheylin (103), White Rock student performance and high spending; and (4) technology, distance learning, building (104), Moscow Public Schools (209), Northern Valley (212), West Solomon projects and innovative superintendents were considered essential for surviving Valley Schools (213), Rolla (217), Ashland (220), North Central (221), Fowler consolidation. (225), Hanston (228), West Smith County (238), Weskan (242), Palco (269), Triplains (275), Jewell (279), West Graham-Morland (280), Elk Valley (283), Once the on-site visits and interviews were completed, we began to develop Cedar Vale (286), Grinnell Public Schools (291), Wheatland (292), Prairie reorganization scenarios, ultimately creating three alternative approaches: (1) an Heights (295), Sylvan Grove (299), Nes Tre La Go (301), Smoky Hill (302), approach based on pupil performance and per pupil spending; (2) an approach based Bazine (304), Brewster (314), Golden Plains (316), Herndon (317), Eastern on enrollment levels relative to number of high schools; and (3) an approach that took

iii iv

Kansas Legislative Research Department 2-13 2017 Special Committee on School Finance into consideration both of the first two approaches and resolved differences between them based on a variety of practical considerations, including distance between schools, school capacity (which we obtained through a survey carried out by the Department of Education), and the information we obtained through the on-site visits and interviews.

Tables in the report show the characteristics of target school districts and their neighboring districts, as well as the mergers of districts associated with the three alternative approaches to reorganization. The figures below summarize the results of each approach for the entire state.

(1) For the approach based on pupil performance and per pupil spending, we identified 28 target districts. We examined all neighbors of those districts for possible reorganization with target districts based on their pupil performance, their per pupil spending, and their distance from the target districts. We were unable to reorganize eight of the target districts using those criteria. We found 20 neighboring districts that could be merged with the 20 remaining target districts to create 20 new districts. The result is 284 districts statewide.

(2) For the approach based on school district size, we identified 76 target districts. We examined all neighbor districts for the 74 districts that we felt had high schools that were either too small or too large based on enrollment relative to number of high schools, excess capacity of schools, and distance between schools. We were able to reconfigure 45 of the 50 districts with high schools that are too small by merging them with 29 neighbor districts and creating 34 new districts. We were able to reconfigure six of the 24 districts with high schools that are too large by merging them with seven neighbor districts and creating five new districts. In total, 51 target districts are merged with 36 neighbor districts to create 39 new districts and a total of 256 districts in the state. Some other approach would need to be taken to address the issue in 20 of the 26 districts with large high schools and in the two large districts.

(3) For the combined approach, we were able to reconfigure 56 target districts with 36 neighboring districts to create 43 new districts and a total of 255 districts statewide. As with the second approach, we were unable to resolve concerns in 21 districts by reorganization, which would require other approaches to be taken.

In order to facilitate reorganizing school districts in Kansas, a number of changes need to be made to the state’s statutes. A&M recommends that the legislature delegate to the State Board of Education the power to change school district boundaries more easily than is currently allowed. The State Board should consider boundary changes by using three processes to assess alternative: (1) Emergency dissolution, (2) Required boundary change planning, and (3) Review of boundary options. The emergency

v

Kansas Legislative Research Department 2-14 2017 Special Committee on School Finance into consideration both of the first two approaches and resolved differences between dissolution is required for those districts that are less than 80 students in 2000, or less them based on a variety of practical considerations, including distance between than 100 students in 2001 and have declining enrollment. Those districts are required to schools, school capacity (which we obtained through a survey carried out by the have a public hearing and report the results to the State Board. The State Board shall Department of Education), and the information we obtained through the on-site visits take action to accept the district report or implement one of their own. The required and interviews. boundary change planning is for all of the other districts identified as part of the 28 original targets on Map 1 in this report. Districts would have three years to work on Tables in the report show the characteristics of target school districts and their improvements or recommendations, then if they are still targets would follow the neighboring districts, as well as the mergers of districts associated with the three emergency dissolution process. The review of boundary options would be for all of the alternative approaches to reorganization. The figures below summarize the results of other districts identified as targets in this report. They would follow the same process as each approach for the entire state. the required boundary change planning districts without the final requirement of dissolution. (1) For the approach based on pupil performance and per pupil spending, we identified 28 target districts. We examined all neighbors of those districts for possible reorganization with target districts based on their pupil performance, their per pupil spending, and their distance from the target districts. We were unable to reorganize eight of the target districts using those criteria. We found 20 neighboring districts that could be merged with the 20 remaining target districts to create 20 new districts. The result is 284 districts statewide.

(2) For the approach based on school district size, we identified 76 target districts. We examined all neighbor districts for the 74 districts that we felt had high schools that were either too small or too large based on enrollment relative to number of high schools, excess capacity of schools, and distance between schools. We were able to reconfigure 45 of the 50 districts with high schools that are too small by merging them with 29 neighbor districts and creating 34 new districts. We were able to reconfigure six of the 24 districts with high schools that are too large by merging them with seven neighbor districts and creating five new districts. In total, 51 target districts are merged with 36 neighbor districts to create 39 new districts and a total of 256 districts in the state. Some other approach would need to be taken to address the issue in 20 of the 26 districts with large high schools and in the two large districts.

(3) For the combined approach, we were able to reconfigure 56 target districts with 36 neighboring districts to create 43 new districts and a total of 255 districts statewide. As with the second approach, we were unable to resolve concerns in 21 districts by reorganization, which would require other approaches to be taken.

In order to facilitate reorganizing school districts in Kansas, a number of changes need to be made to the state’s statutes. A&M recommends that the legislature delegate to the State Board of Education the power to change school district boundaries more easily than is currently allowed. The State Board should consider boundary changes by using three processes to assess alternative: (1) Emergency dissolution, (2) Required boundary change planning, and (3) Review of boundary options. The emergency

v vi

Kansas Legislative Research Department 2-15 2017 Special Committee on School Finance APPENDIX III

Wrap Around Services By Program for FY 2008 - FY 2017 Wrap Around Services IncludesBy Program for Services FY 2008 - FY 2017 Provided to Children of School Age (Grades K-12) Includes Services Provided to Children of School Age (Grades K-12) FY08 FY09 FY10 FY11 FY08 FY12 FY13FY09 FY14 FY15FY10 FY16 FY11FY17 FY12 FY13 FY14 FY15 FY16 FY17 Agency Program Program Description AF SGF AF SGF AF SGF AF SGF AF SGF AF SGF AF SGF AF SGF AF SGF AF SGF AgencyDepartment for Children Communities in SchoolsProgramGrant to provides case management services Programto at- Description AF SGF AF SGF AF SGF AF SGF AF SGF AF SGF AF SGF AF SGF AF SGF AF SGF and Families risk students focusing on improving academics, Department for Children Communitiesbehavior, attendance in Schoolsand graduation rates. Grant to provides case management services to at------1,671,424 - 1,789,625 - 1,500,000 - andDepartment Families for Children Jobs for America's Assists students at risk of failing in school, providesrisk anstudents focusing on improving academics, and Families Graduates avenue for achieving academically, and assistsbehavior, attendance and graduation rates. students in ultimately earning credentials that make it possible to exit school and enter post-secondary ------1,671,424 - 1,789,625 - 1,500,000 - education and/or the workforce. Department for Children Jobs for America's Assists students - at risk - of failing - in school, - provides - an - - - - - 5,419,755 - 102 - 4,100,000 - 3,750,000 - 3,800,000 - Department for Children Kansas Reading Roadmap Works with low income schools in rural and urban andand Families Families (Hysell-Wagner, Kidzlit,Graduates et communities to increase reading proficiency amongavenue for achieving academically, and assists al) at-risk children. ------5,201,613 - 10,318,497 - 9,424,343 - 10,259,081 - Department for Children Project Impact Grant that targets at-risk youth ages 14-17 whostudents live in in ultimately earning credentials that make it and Families high-risk counties. Recruitment and retention programs develop students’ interests in variouspossible fields to exit school and enter post-secondary of study. education and/or - the - workforce. ------187,299 - 108,085 - 424,905 - Department for Children Epic Skillz Grant to build employment skills for college and and Families career readiness, targeting middle schools in ------5,419,755 - 102 - 4,100,000 - 3,750,000 - 3,800,000 - Hutchinson. ------228,670 - 41,063 - 186,528 - DepartmentDepartment for Children for ChildrenSmartmoves/KS AllianceKansas of Provides Reading comprehensive Roadmap abstinence-based teenWorks with low income schools in rural and urban and Families Boys and Girls Clubs pregnancy prevention and education program to at- and Families (Hysell-Wagner,risk youth in seven cities Kidzlit, and three tribalet nations.communities to increase reading proficiency among ------162,927 - 122,194 - 122,195 - 199,987 - 219,434 - 219,435 - Department for Children Urban Scholastic Centeral) Serves urban/inner-city children and youth toat-risk offer a children. ------5,201,613 - 10,318,497 - 9,424,343 - 10,259,081 - Departmentand Families for Children Projectwide array Impact of services to benefit students gradeGrant K-12, that targets at-risk youth ages 14-17 who live in including literacy, after school and evening and Families educational programs. high-risk counties. - Recruitment - - and retention ------46,849 - 116,617 - Department of Education Autism Diagnosis Train and provide Autism Diagnostic Teams to offer early childhood screenings and/or assist schoolsprograms and develop students’ interests in various fields families in developing individual treatment plans and streamlined service delivery. of study. ------187,299 - 108,085 - 424,905 - Department for Children Epic Skillz Grant to build - employment - skills - for college - and798,000 - 1,023,464 - 751,643 - 683,661 - 215,000 - 215,000 - 215,000 - 215,000 - Kansas Department for Serious Emotional Medicaid Home and Community Based Services andAging andFamilies Disability Services Disturbance (SED) waiver* waiver providing services to children who experiencecareer readiness, targeting middle schools in serious emotional disturbance and who are at risk of inpatient psychiatric treatment. Hutchinson. ------228,670 - 41,063 - 186,528 - 1,954,654 2,503,743 2,486,613 2,807,294 2,794,198 3,015,736 2,267,479 2,329,782 2,316,873 2,281,044 DepartmentKansas Department of for ChildrenDentaQuest - Dental Smartmoves/KSDentaQuest Foundation Alliance grant to provide of school-Provides comprehensive abstinence-based teen Health and Environment - based dental services. andPublic HealthFamilies Boys and Girls Clubs pregnancy prevention - - and education - program - to - at------30,000 - 30,000 - 50,000 - Kansas Department of Medicaid Matching Medicaid funds to provide school-based dentalrisk youth in seven cities and three tribal nations. Health and Environment - services. Public Health ------30,000 - - 30,000 -50,000 - 162,927 - 122,194 - 122,195 - 199,987 - 219,434 - 219,435 - Kansas Department of School Screening Program Delta Dental Foundation grant providing dental DepartmentHealth and Environment for - Children Urbanscreenings Scholastic for children. CenterBeginning in FY 2015 Servesthis urban/inner-city children and youth to offer a Public Health program provides dental screening supplies to and Families volunteer screeners. wide array 34,000 of services - to benefit 34,000 students - grade 34,000 K-12, - 34,000 - 34,000 - 34,000 - 34,000 - 34,000 - 70,000 - - - Kansas Department of School Screenings Federal Health Resources and Services Administration Health and Environment - (HRSA) grant providing school-based dental sealants.including literacy, after school and evening Public Health educational 80,000 programs. - 80,000 - 80,000 - 80,000 - - 150,000 - - 80,000 ------46,849 - 116,617 - Kansas Department of CDC Grant - Dental (School Funding through the federal Centers for Disease and DepartmentHealth and Environment of - EducationSealants) AutismPrevention Diagnosis (CDC) to provide sealants to children.Train and provide Autism Diagnostic Teams to offer Public Health ------60,000 - 60,000 - 60,000 - 60,000 - 60,000 - Kansas Department of Healthy Kansas Schools CDC grant to support school wellness coalitionsearly and childhood screenings and/or assist schools and Health and Environment - Grant Program coordinators to implement and promote school Public Health wellness policies and practices in nutrition andfamilies in developing individual treatment plans and physical activity. Also provides professional streamlined service delivery. development and assistance to school nurses on the daily management of students with chronic diseases. - - - - 798,000 - 1,023,464 - 751,643 - 683,661 - 215,000 - 215,000 - 215,000 - 215,000 ------120,000 - 120,000 - 120,000 - 120,000 - KansasKansas Department Department of Committee for for Children'sSerious CDC grant Emotional for implementation of social-emotionalMedicaid Home and Community Based Services Health and Environment - Second Step Program curriculum for selected schools. AgingPublic Health and Disability Services Disturbance (SED) waiver* waiver providing 10,000 services - to 10,000 children who - experience 10,000 - 16,000 - 16,000 - 16,000 - 22,000 - 22,000 - 22,000 - 32,000 - serious emotional disturbance and who are at risk of (TableKansas Legislative spans Research two Department pages and concludes on pages 2-18 and 2-19.)inpatient psychiatric treatment. 12/29/2017 1,954,654 2,503,743 2,486,613 2,807,294 2,794,198 3,015,736 2,267,479 2,329,782 2,316,873 2,281,044 KansasKansas Department Legislative of ResearchDentaQuest Department - Dental 2-16DentaQuest 2017 Foundation Special Committeegrant to provide on School school- Finance Health and Environment - based dental services. Public Health ------30,000 - 30,000 - 50,000 - Kansas Department of Medicaid Matching Medicaid funds to provide school-based dental Health and Environment - services. Public Health ------30,000 30,000 50,000 Kansas Department of School Screening Program Delta Dental Foundation grant providing dental Health and Environment - screenings for children. Beginning in FY 2015 this Public Health program provides dental screening supplies to volunteer screeners. 34,000 - 34,000 - 34,000 - 34,000 - 34,000 - 34,000 - 34,000 - 34,000 - 70,000 - - - Kansas Department of School Screenings Federal Health Resources and Services Administration Health and Environment - (HRSA) grant providing school-based dental sealants. Public Health 80,000 - 80,000 - 80,000 - 80,000 - 150,000 - 80,000 ------Kansas Department of CDC Grant - Dental (School Funding through the federal Centers for Disease and Health and Environment - Sealants) Prevention (CDC) to provide sealants to children. Public Health ------60,000 - 60,000 - 60,000 - 60,000 - 60,000 - Kansas Department of Healthy Kansas Schools CDC grant to support school wellness coalitions and Health and Environment - Grant Program coordinators to implement and promote school Public Health wellness policies and practices in nutrition and physical activity. Also provides professional development and assistance to school nurses on the daily management of students with chronic diseases. ------120,000 - 120,000 - 120,000 - 120,000 - Kansas Department of Committee for Children's CDC grant for implementation of social-emotional Health and Environment - Second Step Program curriculum for selected schools. Public Health 10,000 - 10,000 - 10,000 - 16,000 - 16,000 - 16,000 - 22,000 - 22,000 - 22,000 - 32,000 -

Kansas Legislative Research Department 12/29/2017 Wrap Around Services By Program for FY 2008 - FY 2017 Wrap Around Services Includes ServicesBy Program Provided for FY 2008 to - FY Children 2017 of School Age (Grades K-12) Includes Services Provided to Children of School Age (Grades K-12) FY08 FY09 FY10 FY08 FY11 FY12 FY09 FY13 FY14FY10 FY15 FY16FY11 FY17 FY12 FY13 FY14 FY15 FY16 FY17 Agency Program Program Description AF SGF AF SGF AF SGF AF SGF AF SGF AF SGF AF SGF AF SGF AF SGF AF SGF Agency Department for Children ProgramCommunities in Schools Grant to provides caseProgram management Descriptionservices to at- AF SGF AF SGF AF SGF AF SGF AF SGF AF SGF AF SGF AF SGF AF SGF AF SGF and Families risk students focusing on improving academics, Department for Children Communities in Schoolsbehavior, attendanceGrant and graduation to provides rates. case management services to at------1,671,424 - 1,789,625 - 1,500,000 - and Families Department for Children Jobs for America's Assists students at riskrisk of failing students in school, providesfocusing an on improving academics, and Families Graduates avenue for achievingbehavior, academically, and attendance assists and graduation rates. students in ultimately earning credentials that make it possible to exit school and enter post-secondary ------1,671,424 - 1,789,625 - 1,500,000 - education and/or the workforce. Department for Children Jobs for America's Assists students at risk of failing - in school,- provides - an ------5,419,755 - 102 - 4,100,000 - 3,750,000 - 3,800,000 - Department for Children Kansas Reading Roadmap Works with low income schools in rural and urban and Families and Families Graduates(Hysell-Wagner, Kidzlit, et communities to increaseavenue reading proficiencyfor achieving among academically, and assists al) at-risk children. ------5,201,613 - 10,318,497 - 9,424,343 - 10,259,081 - Department for Children Project Impact Grant that targets at-riskstudents youth ages in 14-17 ultimately who live in earning credentials that make it and Families high-risk counties. Recruitment and retention programs develop students’possible interests to in exitvarious school fields and enter post-secondary of study. education and/or the workforce. ------187,299 - 108,085 - 424,905 - Department for Children Epic Skillz Grant to build employment skills for college and and Families career readiness, targeting middle schools in ------5,419,755 - 102 - 4,100,000 - 3,750,000 - 3,800,000 - Hutchinson. ------228,670 - 41,063 - 186,528 - Department forDepartment Children for Children KansasSmartmoves/KS Reading Alliance ofRoadmap Provides comprehensive Works abstinence-based with low teen income schools in rural and urban and Families Boys and Girls Clubs pregnancy prevention and education program to at- and Families (Hysell-Wagner, Kidzlit,risk youth etin seven citiescommunities and three tribal nations. to increase reading proficiency among ------162,927 - 122,194 - 122,195 - 199,987 - 219,434 - 219,435 - Department for Children al)Urban Scholastic Center Serves urban/inner-cityat-risk children children. and youth to offer a ------5,201,613 - 10,318,497 - 9,424,343 - 10,259,081 - Department forand Children Families Project Impact wide array of servicesGrant to benefit that students targets grade K-12, at-risk youth ages 14-17 who live in including literacy, after school and evening and Families educational programs.high-risk counties. Recruitment - and - retention ------46,849 - 116,617 - Department of Education Autism Diagnosis Train and provide Autism Diagnostic Teams to offer early childhood screeningsprograms and/or assist develop schools and students’ interests in various fields families in developing individual treatment plans and streamlined service ofdelivery. study. ------187,299 - 108,085 - 424,905 - Department for Children Epic Skillz Grant to build employment - skills for - college - and - 798,000 - 1,023,464 - 751,643 - 683,661 - 215,000 - 215,000 - 215,000 - 215,000 - Kansas Department for Serious Emotional Medicaid Home and Community Based Services and Families Aging and Disability Services Disturbance (SED) waiver* waiver providing servicescareer to children readiness, who experience targeting middle schools in serious emotional disturbance and who are at risk of inpatient psychiatricHutchinson. treatment. ------228,670 - 41,063 - 186,528 - 1,954,654 2,503,743 2,486,613 2,807,294 2,794,198 3,015,736 2,267,479 2,329,782 2,316,873 2,281,044 Department forKansas Children Department of Smartmoves/KSDentaQuest - Dental AllianceDentaQuest of Foundation Provides grant to provide comprehensive school- abstinence-based teen Health and Environment - based dental services. and Families Public Health Boys and Girls Clubs pregnancy prevention and - education - program - to at------30,000 - 30,000 - 50,000 - Kansas Department of Medicaid Matching Medicaid funds to providerisk school-basedyouth in dental seven cities and three tribal nations. Health and Environment - services. Public Health ------30,000 - 30,000 - -50,000 162,927 - 122,194 - 122,195 - 199,987 - 219,434 - 219,435 - Kansas Department of School Screening Program Delta Dental Foundation grant providing dental Department forHealth Children and Environment - Urban Scholastic Centerscreenings for children.Serves Beginning urban/inner-city in FY 2015 this children and youth to offer a Public Health program provides dental screening supplies to and Families volunteer screeners.wide array of services to 34,000 benefit students - grade34,000 K-12, - 34,000 - 34,000 - 34,000 - 34,000 - 34,000 - 34,000 - 70,000 - - - Kansas Department of School Screenings Federal Health Resources and Services Administration Health and Environment - (HRSA) grant providingincluding school-based literacy,dental sealants. after school and evening Public Health educational programs. 80,000 - 80,000 - 80,000 - - 80,000 - - 150,000 - - 80,000 ------46,849 - 116,617 - Kansas Department of CDC Grant - Dental (School Funding through the federal Centers for Disease and Department ofHealth Education and Environment - AutismSealants) Diagnosis Prevention (CDC) toTrain provide sealants and provideto children. Autism Diagnostic Teams to offer Public Health ------60,000 - 60,000 - 60,000 - 60,000 - 60,000 - Kansas Department of Healthy Kansas Schools CDC grant to supportearly school wellnesschildhood coalitions andscreenings and/or assist schools and Health and Environment - Grant Program coordinators to implement and promote school Public Health wellness policies andfamilies practices in nutrition in developing and individual treatment plans and physical activity. Alsostreamlined provides professional service delivery. development and assistance to school nurses on the daily management of students with chronic diseases. - - - - 798,000 - 1,023,464 - 751,643 - 683,661 - 215,000 - 215,000 - 215,000 - 215,000 ------120,000 - 120,000 - 120,000 - 120,000 - Kansas DepartmentKansas Department for of SeriousCommittee Emotional for Children's CDC grant for implementationMedicaid of social-emotional Home and Community Based Services Health and Environment - Second Step Program curriculum for selected schools. Aging and DisabilityPublic Health Services Disturbance (SED) waiver* waiver providing services 10,000 to children - who experience10,000 - 10,000 - 16,000 - 16,000 - 16,000 - 22,000 - 22,000 - 22,000 - 32,000 - serious emotional disturbance and who are at risk of Kansas Legislative Research Department inpatient psychiatric treatment. 12/29/2017 1,954,654 2,503,743 2,486,613 2,807,294 2,794,198 3,015,736 2,267,479 2,329,782 2,316,873 2,281,044 Kansas Department of DentaQuest - Dental DentaQuest Foundation grant to provide school- Kansas Legislative Research Department 2-17 2017 Special Committee on School Finance Health and Environment - based dental services. Public Health ------30,000 - 30,000 - 50,000 - Kansas Department of Medicaid Matching Medicaid funds to provide school-based dental Health and Environment - services. Public Health ------30,000 30,000 50,000 Kansas Department of School Screening Program Delta Dental Foundation grant providing dental Health and Environment - screenings for children. Beginning in FY 2015 this Public Health program provides dental screening supplies to volunteer screeners. 34,000 - 34,000 - 34,000 - 34,000 - 34,000 - 34,000 - 34,000 - 34,000 - 70,000 - - - Kansas Department of School Screenings Federal Health Resources and Services Administration Health and Environment - (HRSA) grant providing school-based dental sealants. Public Health 80,000 - 80,000 - 80,000 - 80,000 - 150,000 - 80,000 ------Kansas Department of CDC Grant - Dental (School Funding through the federal Centers for Disease and Health and Environment - Sealants) Prevention (CDC) to provide sealants to children. Public Health ------60,000 - 60,000 - 60,000 - 60,000 - 60,000 - Kansas Department of Healthy Kansas Schools CDC grant to support school wellness coalitions and Health and Environment - Grant Program coordinators to implement and promote school Public Health wellness policies and practices in nutrition and physical activity. Also provides professional development and assistance to school nurses on the daily management of students with chronic diseases. ------120,000 - 120,000 - 120,000 - 120,000 - Kansas Department of Committee for Children's CDC grant for implementation of social-emotional Health and Environment - Second Step Program curriculum for selected schools. Public Health 10,000 - 10,000 - 10,000 - 16,000 - 16,000 - 16,000 - 22,000 - 22,000 - 22,000 - 32,000 -

Kansas Legislative Research Department 12/29/2017 Wrap Around Services By Program for FY 2008 - FY 2017 Includes Services Provided to Children of School Age (Grades K-12) (Continued)

FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 Agency Program Program Description AF SGF AF SGF AF SGF AF SGF AF SGF AF SGF AF SGF AF SGF AF SGF AF SGF Department for Children Communities in Schools Grant to providesFY08 case managementFY09 services toFY10 at- FY11 FY12 FY13 FY14 FY15 FY16 FY17 Agency Program Program Description AF SGF AF SGF AF SGF AF SGF AF SGF AF SGF AF SGF AF SGF AF SGF AF SGF Kansasand Department Families of Committee for Children's CDC funding for literature units to support social-risk students focusing on improving academics, Health and Environment - Second Step Program emotional curriculum for selected schools. Public Health behavior, 25,000 attendance - and graduation 25,000 -rates. 25,000 - 40,000 - 40,000 - 40,000 - 55,000 - 55,000 - 55,000 - 80,000 - Kansas Department of Committee for Children's Social-emotional curriculum materials and evaluations Health and Environment - Second Step Program for selected schools. ------1,671,424 - 1,789,625 - 1,500,000 - Public Health 35,000 - 35,000 - 35,000 - 56,000 - 56,000 - 56,000 - 77,000 - 77,000 - 77,000 - 112,000 - KansasDepartment Health Policy for SchoolChildren Based Services JobsThese for totals America's include all school based services. PriorAssists to students at risk of failing in school, provides an Authorityand Families GraduatesFY 2012 these services were not reported by typeavenue of for achieving academically, and assists service in the Medical Assistance Report. students 14,605,084 in ultimately 5,731,712 earning 27,050,175 credentials 9,239,563 that 25,877,964 make 7,970,030 it 19,531,897 6,371,810 ------Kansas Department of School Based Services Targeted Case Management Health and Environment - possible to exit school and enter post-secondary Health Care Finance ------412,107 10,157 351,874 8,728 389,746 9,805 481,362 755 426,313 46 477,052 1,196 Kansas Department of School Based Services Rehabilitation education and/or the workforce. Health and Environment - Health Care Finance ------3,686,439 - 1,588,487 3,470,471 - 1,508,268 3,778,828 - 1,642,189 4,043,646 - 1,752,656 3,850,865 - 1,683,370 3,802,454 - 1,673,080 - - - 5,419,755 - 102 - 4,100,000 - 3,750,000 - 3,800,000 - KansasDepartment Department of for SchoolChildren Based Services KansasPhysical Reading Therapy Roadmap Works with low income schools in rural and urban Health and Environment ------124,005 53,434 126,684 55,049 129,638 56,332 143,947 62,372 124,804 54,794 125,755 55,332 Kansasand Department Families of School Based Services (Hysell-Wagner,Occupational Therapy Kidzlit, et communities to increase reading proficiency among Health and Environment - Health Care Finance al) at-risk children. ------91,990 - 39,638 87,912 - 38,177 95,685 - 41,555 122,961 - 53,275 105,778- 46,390 - 93,705 41,230 - - - - - 5,201,613 - 10,318,497 - 9,424,343 - 10,259,081 - Kansas Department of School Based Services Speech/Language Services HealthDepartment and Environment for - Children Project Impact Grant that targets at-risk youth ages 14-17 who live in Healthand Care Families Finance high-risk counties. - Recruitment - - and retention - - - - - 12,589,946 5,425,008 12,689,763 5,515,912 14,321,483 6,224,592 15,194,771 6,587,485 14,129,843 6,214,022 14,923,579 6,566,375 Kansas Department of School Based Services Audiology Services Health and Environment - programs develop students’ interests in various fields Health Care Finance ------55,453 23,895 47,617 20,676 75,423 32,767 83,751 36,272 77,308 33,888 82,919 36,484 Kansas Department of School Based Services Mental Health Services of study. ------187,299 - 108,085 - 424,905 - Health and Environment - HealthDepartment Care Finance for Children Epic Skillz Grant to build - employment - skills - for college - and - - - - 950,144 407,598 891,864 384,812 1,163,083 498,562 1,214,773 515,900 1,156,933 485,997 999,111 439,609 Kansasand Department Families of School Based Services Other Practitioner Services career readiness, targeting middle schools in Health and Environment - Health Care Finance Hutchinson. ------2,021,434 - 871,036 2,322,866 - 1,009,482 2,050,158 - 891,075 1,853,468 - 803,228 1,858,510 - 804,709 1,663,948 - 732,137 ------228,670 - 41,063 - 186,528 - Kansas Department of School Based Services Other Services (cost settlements for local education HealthDepartment and Environment for - Children Smartmoves/KSagencies) Alliance of Provides comprehensive abstinence-based teen Healthand Care Families Finance Boys and Girls Clubs pregnancy prevention - - and education - -program to- at- - - - 609,538 7,805 15,083,906 4,923 15,383,034 6,678 16,009,291 10,594 15,593,007 217,825 17,086,198 501,147 risk youth in seven cities and three tribal nations. Notes for Department for Children and Families: Expenditures for programs such as Early Head Start and Early Steps to School Success are not included as these are for children under age 5. ------162,927 - 122,194 - 122,195 - 199,987 - 219,434 - 219,435 - NotesTransfers forto KSDE Department for Parents as Teachers for Children and Kansas Preschool and Families: Programs are not included as these are for children under the age of 5. ExpendituresPreventionDepartment programs for such programfor as FamilyChildren s Preservation, such as Early HealthyUrban Head Families, StartScholastic etc. and are not Early included. Center Steps to SchoolServes Success areurban/inner-city not included as these children are for children and youth under toage offer 5. a TransfersChildand care Families subsidy to KSDE payments for are Parents not included as Teachers regardless ofand the Kansasage of the Preschool child. Programs arewide not included array asof these services are for tochildren benefit under students the age of grade5. K-12, Prevention programs such as Family Preservation, Healthy Families, etc. are not included. Notes for Department of Education: including literacy, after school and evening ChildAutism Diagnosiscare subsidy program payments also provides are services not toincluded younger children; regardless expenditures of the include age of entire the program.child. educational programs. ------46,849 - 116,617 - NotesNotes for forKansas Department Department for Aging of Education: and Disability Services: AutismSeriousDepartment Emotional Diagnosis Disturbance of program Education (SED) HCBSalso waiverprovides expendituresAutism services are Diagnosisto for younger each federal children; fiscal year (FFY).expenditures SGF Trainshare noted include and to correspond provide entire toprogram. FMAP Autism percentage, Diagnostic but not provided Teams by agency. to offer

NotesNotes for forKansas Kansas Department Department of Health and Environment for Aging - Public and Health: Disability Services: early childhood screenings and/or assist schools and SeriousThe total number Emotional of schools Disturbance receiving CDC (SED)grants for HCBS the Committee waiver for expenditures Children's Second are Step for Program each are familiesfederal as follows: fiscal infive developingschoolsyear (FFY). FY 2008 - SGFFY individual2010, share eight notedschools treatment toFY 2011correspond - FY 2013, plans elevento FMAP schools and FY 2014 - FY 2016, and sixteen schools FY 2017 - FY 2019. percentage,The agency notes but that not totals provided provided are by approximate agency. and may not be the exact amounts funded. School based services also provides services to younger children; expenditures include entire program. streamlined service delivery. Notes for Kansas Department of Health and Environment - Public Health: Notes for Kansas Health Policy Authority and Kansas Department of Health and Environment - Health Care Finance: - - - - 798,000 - 1,023,464 - 751,643 - 683,661 - 215,000 - 215,000 - 215,000 - 215,000 - TheSGF amount total listednumber includes of allschools state funds receiving (SGF and feeCDC funds). grants for the Committee for Children’s Second Step Program are as follows: five schools FY 2008 - FY 2010,Kansas eight Department schools FY 2011 for - FY 2013, elevenSerious schools Emotional FY 2014 - FY 2016, and Medicaidsixteen schools Home FY 2017 and - FYCommunity 2019. Based Services TheAging agency and notes Disability that totals Services provided areDisturbance approximate and(SED) may waiver*not be the exactwaiver amounts providing funded. services to children who experience School based services also provides services to younger children; expendituresserious include entire emotional program. disturbance and who are at risk of Notes for Kansas Health Policy Authority and Kansas Department ofinpatient Health and psychiatric Environment treatment. - Health Care Finance: SGF amount listed includes all state funds (SGF and fee funds). 1,954,654 2,503,743 2,486,613 2,807,294 2,794,198 3,015,736 2,267,479 2,329,782 2,316,873 2,281,044 Kansas Department of DentaQuest - Dental DentaQuest Foundation grant to provide school- Health and Environment - based dental services.

KansasPublic KansasLegislative Health Research Legislative Department Research Department 2-18 2017 Special Committee on School Finance ------12/29/2017 ------30,000 - 30,000 - 50,000 - Kansas Department of Medicaid Matching Medicaid funds to provide school-based dental Health and Environment - services. Public Health ------30,000 30,000 50,000 Kansas Department of School Screening Program Delta Dental Foundation grant providing dental Health and Environment - screenings for children. Beginning in FY 2015 this Public Health program provides dental screening supplies to volunteer screeners. 34,000 - 34,000 - 34,000 - 34,000 - 34,000 - 34,000 - 34,000 - 34,000 - 70,000 - - - Kansas Department of School Screenings Federal Health Resources and Services Administration Health and Environment - (HRSA) grant providing school-based dental sealants. Public Health 80,000 - 80,000 - 80,000 - 80,000 - 150,000 - 80,000 ------Kansas Department of CDC Grant - Dental (School Funding through the federal Centers for Disease and Health and Environment - Sealants) Prevention (CDC) to provide sealants to children. Public Health ------60,000 - 60,000 - 60,000 - 60,000 - 60,000 - Kansas Department of Healthy Kansas Schools CDC grant to support school wellness coalitions and Health and Environment - Grant Program coordinators to implement and promote school Public Health wellness policies and practices in nutrition and physical activity. Also provides professional development and assistance to school nurses on the daily management of students with chronic diseases. ------120,000 - 120,000 - 120,000 - 120,000 - Kansas Department of Committee for Children's CDC grant for implementation of social-emotional Health and Environment - Second Step Program curriculum for selected schools. Public Health 10,000 - 10,000 - 10,000 - 16,000 - 16,000 - 16,000 - 22,000 - 22,000 - 22,000 - 32,000 -

Kansas Legislative Research Department 12/29/2017 Wrap Around Services By Program for FY 2008 - FY 2017 Includes Services Provided to Children of School Age (Grades K-12) (Continued)

FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 Agency Program Program Description AF SGF AF SGF AF SGF AF SGF AF SGF AF SGF AF SGF AF SGF AF SGF AF SGF Department for Children Communities in Schools Grant to provides case managementFY08 servicesFY09 to at- FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 Agency Program Program Description AF SGF AF SGF AF SGF AF SGF AF SGF AF SGF AF SGF AF SGF AF SGF AF SGF and FamiliesKansas Department of Committee for Children's CDC funding for literaturerisk units students to support social- focusing on improving academics, Health and Environment - Second Step Program emotional curriculum for selected schools. Public Health behavior, attendance and 25,000 graduation - rates. 25,000 - 25,000 - 40,000 - 40,000 - 40,000 - 55,000 - 55,000 - 55,000 - 80,000 - Kansas Department of Committee for Children's Social-emotional curriculum materials and evaluations Health and Environment - Second Step Program for selected schools. ------1,671,424 - 1,789,625 - 1,500,000 - Public Health 35,000 - 35,000 - 35,000 - 56,000 - 56,000 - 56,000 - 77,000 - 77,000 - 77,000 - 112,000 - Department Kansasfor Children Health Policy SchoolJobs Based for Services America'sThese totals include all Assistsschool based students services. Prior to at risk of failing in school, provides an and FamiliesAuthority Graduates FY 2012 these services wereavenue not reported for by achieving type of academically, and assists service in the Medical Assistance Report. students in ultimately 14,605,084 earning 5,731,712 credentials 27,050,175 that 9,239,563make it 25,877,964 7,970,030 19,531,897 6,371,810 ------Kansas Department of School Based Services Targeted Case Management Health and Environment - possible to exit school and enter post-secondary Health Care Finance ------412,107 10,157 351,874 8,728 389,746 9,805 481,362 755 426,313 46 477,052 1,196 Kansas Department of School Based Services Rehabilitation education and/or the workforce. Health and Environment - Health Care Finance ------3,686,439 1,588,487- 3,470,471 - 1,508,268 3,778,828 - 1,642,189 4,043,646 - 1,752,656 3,850,865 - 1,683,370 3,802,454 - 1,673,080 - - 5,419,755 - 102 - 4,100,000 - 3,750,000 - 3,800,000 - Department Kansasfor Children Department of SchoolKansas Based ServicesReading RoadmapPhysical Therapy Works with low income schools in rural and urban Health and Environment ------124,005 53,434 126,684 55,049 129,638 56,332 143,947 62,372 124,804 54,794 125,755 55,332 and FamiliesKansas Department of School(Hysell-Wagner, Based Services OccupationalKidzlit, etTherapy communities to increase reading proficiency among Health and Environment - Health Care Finance al) at-risk children. ------91,990 - 39,638 87,912 - 38,177 95,685 - 41,555 122,961 - 53,275 105,778 - 46,390 93,705 - 41,230 - - - - 5,201,613 - 10,318,497 - 9,424,343 - 10,259,081 - Kansas Department of School Based Services Speech/Language Services Department Healthfor Childrenand Environment - Project Impact Grant that targets at-risk youth ages 14-17 who live in and FamiliesHealth Care Finance high-risk counties. Recruitment - and - retention ------12,589,946 5,425,008 12,689,763 5,515,912 14,321,483 6,224,592 15,194,771 6,587,485 14,129,843 6,214,022 14,923,579 6,566,375 Kansas Department of School Based Services Audiology Services Health and Environment - programs develop students’ interests in various fields Health Care Finance ------55,453 23,895 47,617 20,676 75,423 32,767 83,751 36,272 77,308 33,888 82,919 36,484 Kansas Department of School Based Services Mental Health Servicesof study. ------187,299 - 108,085 - 424,905 - Health and Environment - Department Healthfor ChildrenCare Finance Epic Skillz Grant to build employment - skills for- college - and - - - - - 950,144 407,598 891,864 384,812 1,163,083 498,562 1,214,773 515,900 1,156,933 485,997 999,111 439,609 and FamiliesKansas Department of School Based Services Other Practitioner Servicescareer readiness, targeting middle schools in Health and Environment - Health Care Finance Hutchinson. ------2,021,434 - 871,036 2,322,866 - 1,009,482 2,050,158 - 891,075 1,853,468 - 803,228 1,858,510 - 804,709 1,663,948 - 732,137 ------228,670 - 41,063 - 186,528 - Kansas Department of School Based Services Other Services (cost settlements for local education Department Healthfor Childrenand Environment - Smartmoves/KS agencies)Alliance of Provides comprehensive abstinence-based teen and FamiliesHealth Care Finance Boys and Girls Clubs pregnancy prevention and - education - program - to at------609,538 7,805 15,083,906 4,923 15,383,034 6,678 16,009,291 10,594 15,593,007 217,825 17,086,198 501,147 risk youth in seven cities and three tribal nations. Notes for Department for Children and Families: Expenditures for programs such as Early Head Start and Early Steps to School Success are not included as these are for children under age 5. ------162,927 - 122,194 - 122,195 - 199,987 - 219,434 - 219,435 - Transfers to KSDE for Parents as Teachers and Kansas Preschool Programs are not included as these are for children under the age of 5. Department Preventionfor Children programs such as FamilyUrban Preservation, Scholastic Healthy Families, Center etc. are not included.Serves urban/inner-city children and youth to offer a and FamiliesChild care subsidy payments are not included regardless of the age of the child. wide array of services to benefit students grade K-12, Notes for Department of Education: Autism Diagnosis program also provides services to younger children; expendituresincluding include entire program.literacy, after school and evening educational programs. ------46,849 - 116,617 - Notes for Kansas Department for Aging and Disability Services: Department Seriousof Education Emotional DisturbanceAutism (SED) HCBS waiverDiagnosis expenditures are for each federalTrain fiscal year and (FFY). provide SGF share noted Autism to correspond Diagnostic to FMAP percentage, Teams but not to provided offer by agency.

Notes for Kansas Department of Health and Environment - Public Health: early childhood screenings and/or assist schools and The total number of schools receiving CDC grants for the Committee for Children's Second Step Program are as follows: five schools FY 2008 - FY 2010, eight schools FY 2011 - FY 2013, eleven schools FY 2014 - FY 2016, and sixteen schools FY 2017 - FY 2019. The agency notes that totals provided are approximate and may not be the exact amountsfamilies funded. in developing individual treatment plans and School based services also provides services to younger children; expenditures includestreamlined entire program. service delivery. Notes for Kansas Health Policy Authority and Kansas Department of Health and Environment - Health Care Finance: - - - - 798,000 - 1,023,464 - 751,643 - 683,661 - 215,000 - 215,000 - 215,000 - 215,000 - SGF amount listed includes all state funds (SGF and fee funds). Kansas Department for Serious Emotional Medicaid Home and Community Based Services Aging and Disability Services Disturbance (SED) waiver* waiver providing services to children who experience serious emotional disturbance and who are at risk of inpatient psychiatric treatment. 1,954,654 2,503,743 2,486,613 2,807,294 2,794,198 3,015,736 2,267,479 2,329,782 2,316,873 2,281,044 Kansas Department of DentaQuest - Dental DentaQuest Foundation grant to provide school- Health and Environment - based dental services.

Public HealthKansas Legislative Research Department - Kansas Legislative - Research - Department - 2-19 - 2017 - Special Committee - on School -Finance 12/29/2017 ------30,000 - 30,000 - 50,000 - Kansas Department of Medicaid Matching Medicaid funds to provide school-based dental Health and Environment - services. Public Health ------30,000 30,000 50,000 Kansas Department of School Screening Program Delta Dental Foundation grant providing dental Health and Environment - screenings for children. Beginning in FY 2015 this Public Health program provides dental screening supplies to volunteer screeners. 34,000 - 34,000 - 34,000 - 34,000 - 34,000 - 34,000 - 34,000 - 34,000 - 70,000 - - - Kansas Department of School Screenings Federal Health Resources and Services Administration Health and Environment - (HRSA) grant providing school-based dental sealants. Public Health 80,000 - 80,000 - 80,000 - 80,000 - 150,000 - 80,000 ------Kansas Department of CDC Grant - Dental (School Funding through the federal Centers for Disease and Health and Environment - Sealants) Prevention (CDC) to provide sealants to children. Public Health ------60,000 - 60,000 - 60,000 - 60,000 - 60,000 - Kansas Department of Healthy Kansas Schools CDC grant to support school wellness coalitions and Health and Environment - Grant Program coordinators to implement and promote school Public Health wellness policies and practices in nutrition and physical activity. Also provides professional development and assistance to school nurses on the daily management of students with chronic diseases. ------120,000 - 120,000 - 120,000 - 120,000 - Kansas Department of Committee for Children's CDC grant for implementation of social-emotional Health and Environment - Second Step Program curriculum for selected schools. Public Health 10,000 - 10,000 - 10,000 - 16,000 - 16,000 - 16,000 - 22,000 - 22,000 - 22,000 - 32,000 -

Kansas Legislative Research Department 12/29/2017 APPENDIX IV Appendix IV

QUESTION 2: How Does the Funding School Districts Receive for Funded Legislative Post Audit Transportation Services Compare to Their Actual Costs?

Performance Audit  The state provides transportation funding to districts based on costs estimated Report Highlights through a formula rather than the districts’ actual costs.    We selected a sample of 16 districts across the state and compared their costs for providing required transportation to the amount of funding they received. (p. K-12 Education: Evaluating Transportation Services 17)

 Funding  Overall, our sample districts received less funding than it cost them to transport

students, but the results vary by district. (p.17)

 We estimated the districts in our sample spent about $20 million to provide “funded” transportation services, and received about $16 million in state QUESTION 1: Has Transportation Funding Been Allocated to School transportation funding.  December 2017  R-17-020 Districts in Accordance with the Statutory Formula in Recent Years? The difference between state transportation funding and the estimated cost of funded services varied significantly across our 16 districts.  Two large districts in our sample account for most of the difference between funding and costs.  KSDE has correctly executed the numerous calculations in the transportation  The mixed results for our sample are not surprising, given that the funding formula for the past five years. These include allocating expenditures transportation formula funds districts based on estimated costs rather than Background Information between groups of students by distance, plotting per-student expenditures on a actual costs. chart, determining a curve of best fit, and calculating the transportation FTE for

State law only requires districts each district. (p.11)  The funding formula uses student density to estimate transportation costs, but a to transport students who must  However, KSDE has continued to implement a funding minimum to the formula variety of other factors can also influence costs. (p.20) travel at least 2.5 miles and do which is not authorized in statute. (p.11) not live in the same town as  The funding formula uses student density to help predict a district’s costs their school. On the other hand,  A minimum funding amount was removed from statute in 1973 but KSDE because density is strongly related to transportation costs. the state provides transportation  However, the geography of a district and where students live can lead to has continued to implement it for the most densely populated districts. funding for all in-districts  Over the past five years, KSDE’s minimum funding level has provided a significant cost differences between districts of similar student densities. students who live at least 2.5  District policies related to which students the district will transport or how total of $45 million more in transportation funding than allowed by law. miles from their school.  State law does not include a minimum funding level for transportation, and it students are assigned to school can also influence costs. does not give KSDE the authority to create one.  Last, factors related to bus driver pay and the fuel efficiency of a district’s

State transportation funding is  KSDE officials told us they continued adding a minimum funding level bus fleet can also influence a district’s per-student transportation costs.

based on a statutory formula because some legislators had requested it in previous years.  Based on our sample, the current funding formula appears to understate the which allocates funding based  Although there is no provision for a minimum funding level in state law, our comparative cost of transporting students who live at least 2.5 miles from school. on districts’ estimated, not findings in Question 2 of this audit suggest a minimum might be appropriate. (p.22) actual, transportation costs. The

state will provide an estimated  KSDE’s methods for counting students do not always align with statute, but the  Under the current funding formula, students who live at least 2.5 miles from $98 million in transportation effect on funding is likely minimal. (p.14) school are weighted 2.8 times more heavily than other students when

funding to school districts in the allocating costs. 2017-18 school year through  State law requires students for whom “transportation was made available”  For nearly all the districts in our sample, we estimated the comparative cost ratio to transport funded students was significantly greater than the 2.8 ratio this formula. be counted for funding purposes, even if the student did not actually ride the bus. currently in statute.  The way KSDE counts students for funding purpose is not consistent with  That is because the vast majority of their total transportation costs were

that statutory definition. related to transporting students who live at least 2.5 miles from school.  We estimated a comparative cost ratio of 5.0 might better reflect how

o KSDE counts all students who live at least 2.5 miles from school for districts’ costs are allocated between students who live at least 2.5 miles funding purposes, but does not make sure transportations services from school and other students. were made available to these students.  We estimate that increasing the comparative cost ratio to 5.0 would

o For students who live less than 2.5 miles from school, KSDE mostly increase statewide transportation funding by about $4 million over 2016-17 counts students who were actually transported rather than only counting transportation funding. students for whom transportation was made available. o KSDE reduces the count of students who only ride the bus one way.

 However, the difference between the statutory definition and KSDE’s

method for counting students likely has a minimal effect on funding.

Kansas Legislative Research Department 2-20 2017 Special Committee on School Finance Appendix IV

QUESTION 2: How Does the Funding School Districts Receive for Funded Legislative Post Audit Transportation Services Compare to Their Actual Costs?

Performance Audit  The state provides transportation funding to districts based on costs estimated Report Highlights through a formula rather than the districts’ actual costs.    We selected a sample of 16 districts across the state and compared their costs for providing required transportation to the amount of funding they received. (p. K-12 Education: Evaluating Transportation Services 17)

 Funding  Overall, our sample districts received less funding than it cost them to transport

students, but the results vary by district. (p.17)

 We estimated the districts in our sample spent about $20 million to provide “funded” transportation services, and received about $16 million in state QUESTION 1: Has Transportation Funding Been Allocated to School transportation funding.  December 2017  R-17-020 Districts in Accordance with the Statutory Formula in Recent Years? The difference between state transportation funding and the estimated cost of funded services varied significantly across our 16 districts.  Two large districts in our sample account for most of the difference between funding and costs.  KSDE has correctly executed the numerous calculations in the transportation  The mixed results for our sample are not surprising, given that the funding formula for the past five years. These include allocating expenditures transportation formula funds districts based on estimated costs rather than Background Information between groups of students by distance, plotting per-student expenditures on a actual costs. chart, determining a curve of best fit, and calculating the transportation FTE for

State law only requires districts each district. (p.11)  The funding formula uses student density to estimate transportation costs, but a to transport students who must  However, KSDE has continued to implement a funding minimum to the formula variety of other factors can also influence costs. (p.20) travel at least 2.5 miles and do which is not authorized in statute. (p.11) not live in the same town as  The funding formula uses student density to help predict a district’s costs their school. On the other hand,  A minimum funding amount was removed from statute in 1973 but KSDE because density is strongly related to transportation costs. the state provides transportation  However, the geography of a district and where students live can lead to has continued to implement it for the most densely populated districts. funding for all in-districts  Over the past five years, KSDE’s minimum funding level has provided a significant cost differences between districts of similar student densities. students who live at least 2.5  District policies related to which students the district will transport or how total of $45 million more in transportation funding than allowed by law. miles from their school.  State law does not include a minimum funding level for transportation, and it students are assigned to school can also influence costs. does not give KSDE the authority to create one.  Last, factors related to bus driver pay and the fuel efficiency of a district’s

State transportation funding is  KSDE officials told us they continued adding a minimum funding level bus fleet can also influence a district’s per-student transportation costs. based on a statutory formula because some legislators had requested it in previous years.  Based on our sample, the current funding formula appears to understate the which allocates funding based  Although there is no provision for a minimum funding level in state law, our comparative cost of transporting students who live at least 2.5 miles from school. on districts’ estimated, not findings in Question 2 of this audit suggest a minimum might be appropriate. (p.22) actual, transportation costs. The state will provide an estimated  KSDE’s methods for counting students do not always align with statute, but the  Under the current funding formula, students who live at least 2.5 miles from $98 million in transportation effect on funding is likely minimal. (p.14) school are weighted 2.8 times more heavily than other students when funding to school districts in the allocating costs. 2017-18 school year through  State law requires students for whom “transportation was made available”  For nearly all the districts in our sample, we estimated the comparative cost ratio to transport funded students was significantly greater than the 2.8 ratio this formula. be counted for funding purposes, even if the student did not actually ride the bus. currently in statute.  The way KSDE counts students for funding purpose is not consistent with  That is because the vast majority of their total transportation costs were that statutory definition. related to transporting students who live at least 2.5 miles from school.  We estimated a comparative cost ratio of 5.0 might better reflect how o KSDE counts all students who live at least 2.5 miles from school for districts’ costs are allocated between students who live at least 2.5 miles funding purposes, but does not make sure transportations services from school and other students. were made available to these students.  We estimate that increasing the comparative cost ratio to 5.0 would o For students who live less than 2.5 miles from school, KSDE mostly increase statewide transportation funding by about $4 million over 2016-17 counts students who were actually transported rather than only counting transportation funding. students for whom transportation was made available. o KSDE reduces the count of students who only ride the bus one way.

 However, the difference between the statutory definition and KSDE’s method for counting students likely has a minimal effect on funding.

Kansas Legislative Research Department 2-21 2017 Special Committee on School Finance

QUESTION 3: What Types of Transportation Requirements and Funding Mechanisms Do Other Similar States Use to Provide and Fund K-12 Transportation?

 A 2006 Washington audit identified four primary mechanisms for state funding of transportation services. (p.27)

 Predictive or efficiency driven formula funding provides funding at a predicted cost level that assumes similar costs for similar districts. Kansas uses this type of formula.  Block-grant funding provides funding as part of a per-student grant given to

school districts.  Approved-cost funding provides reimbursement for specific costs incurred

by transportation programs.

 Per-unit-allocation funding provides a fixed amount for funding based on a

specified unit such as miles driven or students transported.

 Kansas and the five states we reviewed varied as to which students must be transported. (p.28)

 Five of the six states we evaluated, including Kansas, require school districts to provide transportation services, but varied in terms of which students must be transported, ranging from all students to no students  All six states allow districts to use similar methods to provide transportation services. These include having an in-house bus fleet, contracting for busing, or paying for mileage in lieu of busing.

 Only three states, including Kansas, provide dedicated transportation funding. (p.29)

 Kansas, Missouri, and Oklahoma provide dedicated transportation funding, though Kansas provides funding for a narrower group of students that the other states do.  Three of the states we reviewed did not provide any specific funding for transportation, although two did consider transportation within their general state aid.

Kansas Legislative Research Department 2-22 2017 Special Committee on School Finance

SUMMARY OF RECOMMENDATIONS

We recommended the Kansas Department of Education remove the minimum funding level from its transportation funding allocation beginning with the 2018-19 school year. We also recommended the department develop a process to ensure

their counts are consistent with statutory requirements (p.32).

We recommended the Legislature consider reviewing whether a minimum funding

level is appropriate for large, densely populated districts. We also recommended the Legislature consider reviewing the comparative cost ratio to determine if a ratio that better reflects districts’ actual costs is more appropriate. (p.32).

AGENCY RESPONSE

The department generally concurred with the audit’s findings and recommendations. (p.33)

Although we did not request a formal response from the 16 districts we reviewed part of this audit, three districts provided us with informal feedback. All three districts (Wichita, Shawnee Mission, and Dodge City) expressed concerns regarding our recommendations that KSDE discontinue the funding minimum and that KSDE make other changes to align how the department counts students with statute. The districts noted that changes to how the department allocates funding or how it

counts students would likely lead to funding reductions that could be detrimental to students. (p. 33)

Legislative Division of Post Audit

800 SW Jackson Street Suite 1200 Topeka, Kansas 66612 Telephone (785) 296-3792 Website: http://www.kslpa.org/

Scott Frank Legislative Post Auditor

HOW DO I REQUEST AN AUDIT? For more information on this audit By law, individual legislators, legislative committees, or the Governor may request an audit, report, please contact: but any audit work conducted by the division must be directed by the Legislative Post Audit Committee. Any legislator who would like to request an audit should contact the division Heidi Zimmerman directly at (785) 296-3792. [email protected]

Kansas Legislative Research Department 2-23 2017 Special Committee on School Finance SPECIAL COMMITTEE

Report of the Special Committee on Financial Institutions and Insurance to the 2018 Kansas Legislature

CHAIRPERSON: Senator Jeff Longbine

VICE-CHAIRPERSON: Representative Jim Kelly

OTHER MEMBERS: Senators Rick Billinger and Lynn Rogers; and Representatives Cindy Neighbor, Randy Powell, and Jene Vickrey

STUDY TOPIC

Review of 2017 Legislation Affecting Certain Consumer Loans and the Uniform Consumer Credit Code (UCCC) [HB 2267] and 2017 Legislation Modifying Automobile Liability Insurance Policy Requirements [HB 2104]

The Committee is directed to: ● Study the impact of 2017 HB 2267. This review would include a study of current finance charges, rates, and terms under the UCCC; the impact of the proposed legislation and potential modifications related to the Consumer Financial Protection Bureau’s anticipated Final Rule on small dollar lending on financial institutions, loan companies, and Kansas consumers; and the current regulatory environment in Kansas; and

● Review the potential impact associated with amendments to the Insurance Code governing automobile liability insurance policies contained in 2017 HB 2104. Such study should include a review of insurance policy pricing and the marketplace, cost estimates and other available data relating to impact on premiums and policyholders, and pertinent driver data.

December 2017 Special Committee on Financial Institutions and Insurance

KANSAS UNIFORM CONSUMER CREDIT CODE

Conclusions and Recommendations

The Committee makes no recommendation relative to 2017 HB 2267 or the introduction of any legislation affecting certain consumer loan transactions regulated under the Kansas Uniform Consumer Credit Code (UCCC).

The Committee notes its discussion on 2017 HB 2267, the UCCC and its present structure, and the update and comments submitted by stakeholders on the small dollar lending Final Rule published by the Consumer Financial Protection Bureau (CFPB) in October 2017.

● CFPB Final Rule–implementation timeline and uncertainty. The Committee notes concerns expressed by some conferees regarding the uncertainty of the regulatory role of the CFPB and the timing of modifications to the consumer lending provisions of the UCCC, including any state legislative action, during the prescribed 21-month implementation time period of the Final Rule. The Committee also recognizes state regulators have not had sufficient time to evaluate the Final Rule and will have the 21- month implementation period to do so.

● Regulatory review and stakeholder involvement. The Office of the State Bank Commissioner (OSBC) is encouraged to hold regular stakeholder meetings to assist in drafting changes to the UCCC, in light of the CFPB Final Rule and the 21-month implementation period. The Committee requests regular updates during the 2018 Session, to include review of any proposed modifications to the UCCC and implementation concerns for the OSBC, lenders, and consumers.

○ The Committee’s discussion topics also included consumer lending trends and practices, including the length of loans and whether the Final Rule would be applicable to Kansas short-term consumer loan transactions. The Committee also requests further consideration of other trends or practices, such as rolling (or consecutive) loans.

Proposed Legislation: None

BACKGROUND Uniform Consumer Credit Code (UCCC) (2017 HB 2267) and legislation modifying automobile The charge to the Special Committee on liability insurance policy requirements (2017 HB Financial Institutions and Insurance (Committee) 2104). The LCC authorized the Committee to meet was to review and make recommendations on two for one day. topics assigned by the Legislative Coordinating Council (LCC): legislation affecting certain The Committee was directed to study the consumer loan transactions and the Kansas impact of 2017 HB 2267, including a review of current finance charges, rates, and terms under the

Kansas Legislative Research Department 3-1 2017 Financial Institutions and Insurance UCCC; the impact of the proposed legislation and update provided by the OSBC in January 2017 and potential modifications related to the CFPB’s prior Committee minutes from an informational anticipated Final Rule on small dollar lending on hearing on payday lending and short-term financial institutions, loan companies, and Kansas installment loans; a prior interim legislative report consumers; and the current regulatory on the UCCC; and a link to the CFPB’s Final Rule environment in Kansas. (Note: The Final Rule was and the topic of small dollar lending on the CFPB released on October 5, 2017.) website.

HB 2267 was introduced by the House Information provided by Committee staff Committee on Financial Institutions and Pensions. indicated 38 states have specific statutes On February 15, 2017, the House Committee permitting payday lending. In Kansas, two statutes approved a study request to be submitted to the in the UCCC govern payday lending (KSA 16a-2- LCC. On February 22, 2017, the bill was re- 404 and KSA 16a-2-405). A payday loan is a referred to the House Committee on Federal and consumer loan transaction that has a loan amount State Affairs. The study request was jointly signed equal to or less than $500, a payment term by Representative Kelly (Chairperson, House between 7 and 30 days, a finance charge no greater Committee on Financial Institutions and Pensions) than 15 percent of the loan, and the lender and Representative Barker (Chairperson, House anticipates a single repayment. The statute also Committee on Federal and State Affairs). A states a lender and related interest cannot have companion version to the bill, SB 234, was more than two loans outstanding to the same introduced by the Senate Committee on Federal borrower at a time and no more than three loans to and State Affairs on March 20, 2017, and referred any one borrower within a 30-day calendar period. to the Senate Committee on March 21, 2017. A separate statute contains provisions related to military borrowers.

COMMITTEE ACTIVITIES The Code Administrator presented an overview of the role and responsibilities of the The Committee met on October 11, 2017, and Consumer and Mortgage Lending Division (CML) considered both assigned topics. As part of its of the OSBC. One of CML’s primary review of the UCCC topic, the Committee responsibilities is to examine licensed entities for received an overview of the assigned bill; a review compliance with state and federal law. The Code of available resources on the broader topic of Administrator summarized small dollar lending consumer lending and prior legislative licensees in Kansas: payday only companies (49); consideration of the topic; a presentation from the payday only branches (136); payday and title Deputy Commissioner, Consumer and Mortgage companies (10); payday and title branches (74); Lending Division (Code Administrator), Office of title company only (7); and title only branches the State Bank Commissioner (OSBC), on small (42). The company and branch data review finds dollar lending regulation, current lending trends, 66 companies, 252 branches, and 318 locations in and a preliminary review of the new Final Rule; Kansas. Title loans are offered pursuant to KSA and formal testimony from proponents, a neutral 16a-2-401 (open-end credit statute in the UCCC) party, and opponents on HB 2267. and allow a consumer to borrow money up to an amount pre-approved by the lender. The consumer Overview of the topic; small dollar lending is permitted either to pay the balance in full or pay regulation in Kansas and the CFPB Final Rule. in installments. Committee staff provided an overview of resources made available on the Committee’s page on the Kansas Legislative Research Department Also among the information presented by the (KLRD) website, including surveys on unbanked Code Administrator was a review of trends in and underbanked consumers and a paper published small dollar lending. The Code Administrator by the Federal Reserve Bank of Kansas City noted some lenders are moving away from the regarding payday lending practices; KLRD traditional payday loan model and into an Briefing Book articles on payday lending and the installment loan product, which is also permitted UCCC; a KLRD memorandum on state and under the UCCC (a presentation slide illustrated federal payday lending regulation; a legislative this decline from an estimated $415 million in

Kansas Legislative Research Department 3-2 2017 Financial Institutions and Insurance payday loans in CY 2012 to $325 million in CY make helping a consumer who has done business 2016); a growing challenge for both state and with an unlicensed, unregulated Internet lender federal regulators is unlicensed lenders that very challenging because many of these businesses operate primarily, or only, online; and online do not respond or cooperate in answering and unlicensed lenders often operate outside state or settling complaints. federal jurisdiction. It was further noted the CFPB rule will impact the type of small dollar lending Overview of HB 2267. Committee staff products that lenders offer in the future. provided the Committee with a summary of HB 2267. The bill would amend three statutes within Final Rule on payday, vehicle title, and the UCCC relating to consumer loans, as outlined certain high-cost installment loans update. The below (statute, bill section). Code Administrator reviewed the timeline from the CFPB’s proposal of the rule in June 2016 to KSA 16a-2-401 (Section 1). The bill would announcement of the Final Rule on October 5, establish a lender’s finance charge at a rate of 36 2017. The implementation period established for percent per annum, inclusive of all fees, interest, the Final Rule will be 21 months following its and charges contained in the loan contract, publication in the Federal Register. (Note: The including costs of ancillary products, subject to the Final Rule was published in the Federal Register current limitations on prepaid finance charges on November 17, 2017.) The Final Rule: within this statute for any consumer loan with open-end credit (under current law, a lender is ● Covers short-term loans (duration of less permitted to charge a finance charge at any rate than 45 days) that are open-end or closed- agreed to by the parties.) end; KSA 16-2-404 (Section 2). The bill would ● Covers longer-term loans (duration of make several modifications to consumer loan more than 45 days) that are open-end or transactions, more commonly known as payday closed-end and have a balloon payment loans: feature; ● Loan restrictions: The lender would be restricted to one outstanding loan to a ● Exempts certain types of loans from the borrower and any loan would be limited to Final Rule, including loans for autos and a maximum of $500. The minimum term consumer goods, real estate loans, credit of the loan would be the number of cards, student loans, pawn loans, overdraft months equal to the sum of the loan services, and overdraft lines of credit; and principal and all applicable charges, divided by the maximum allowable ● Exempts lenders making 2,500 or fewer monthly payment; loans per year and deriving 10 percent or less in revenue from the loans. ● Loan rates and charges: The lender would be required to accept prepayment from a Lenders will be required to assess a borrower prior to the loan due date and borrower’s ability to repay and limits are placed could not charge any fee or penalty for on the number of loans a consumer may take prepayment. The maximum rate of any within a specific time frame and for short-term loan could not be more than 36 percent per loans; there is a mandatory cooling-off period after annum. The total required monthly three loans. payment could not exceed the greater of 5 percent of the borrower’s verified gross Committee discussion addressed the OSBC’s monthly income or 6 percent of the concern with the growing number of unlicensed borrower’s verified net monthly income and unregulated lenders on the Internet and (income would be verified pursuant to regulatory enforcement actions permitted by law. rules and regulations promulgated by the These entities, the Code Administrator noted, Code Administrator). Other fee provisions would include:

Kansas Legislative Research Department 3-3 2017 Financial Institutions and Insurance ○ The total loan charges could not revenues are based on volume and any decrease or exceed 50 percent of the loan increase in revenues would be dependent on how principal; many loans are issued. Any fiscal effect associated ○ The maximum monthly fee or charge with 2017 HB 2267 is not reflected in The FY would be 5.0 percent of the original 2018 Governor’s Budget Report. loan principal or $20, whichever is less; and Comments on HB 2267—proponents and ○ The maximum return check charge or neutral parties. The Committee received late charge would be the lesser of 5.0 proponent testimony from representatives of percent of the loan principal or $20, Catholic Charities of Northeast Kansas, Catholic plus any amount passed from another Charities of Northern Kansas, and The Pew financial institution; and Charitable Trusts. Written proponent testimony was submitted by a representative of the Kansas ● Lender and agency reporting: The lender Catholic Conference. would be required to disclose terms to the borrower and provide certain notices. Proponent testimony. Proponents highlighted Additionally, lenders would be required to research detailing the excessive fees and financial provide annually certain information to impact of payday lending on Kansans. A conferee the Code Administrator. The Code provided the following example: with a typical Administrator would be required to annual percentage rate (APR) of 391 percent for a publish, at least annually, an aggregate payday loan in Kansas today, a borrower of a $300 report of this information to the public. loan would have that debt for an average period of five months and would repay a total of $750. This proponent also highlighted Colorado’s experience KSA 16a-2-405 (Section 3). In relation to and changes in 2010 law that better align the military borrowers, the bill would prohibit a lender interests of borrowers and lenders and would be from charging annual maintenance fees to military compatible with federal rules. HB 2267 was borrowers or to their dependents. described as an improvement upon the Colorado model, as it would make providing loans easier for Fiscal impact. According to the fiscal note Kansas lenders. Among the bill features addressed prepared by the Division of the Budget, the OSBC in proponent testimony were affordable monthly indicates the bill’s enactment would increase payments, reasonable fees, and enough time to expenditures by $106,250 in FY 2018 and for FY repay loans. Proponents also commented on the 2019. The OSBC also estimates enactment would development of the Kansas Loan Pool Project decrease revenues by $260,000 in FY 2018 and for (KLPP), which has helped more than 100 families FY 2019. The OSBC would require 1.0 additional refinance more than $150,000 in payday loans full-time equivalent employee (FTE) in its since KLPP’s inception. One proponent spoke to Examination Division with a salary of $45,000, her own experience with payday lending and her $18,650 for benefits, $1,000 for office equipment inability to repay the loans, as well as KLPP and space, and $8,400 for travel to comply with clients’ experiences with payday lending practices. the bill. The OSBC also estimates a need for 0.5 Proponents urged the Committee to take additional FTE in its Licensing Division with a appropriate legislative action to alleviate the salary of $22,500, $9,700 for benefits, and $1,000 financial burden of individuals utilizing short- for office equipment and space to comply with term, high-interest loans. provisions of the bill. The estimated increase in expenditures relating to the bill would be ongoing. Neutral testimony. The Committee received The OSBC also estimates revenues relating to neutral testimony from the Code Administrator, payday loan transactions to decrease by OSBC. The conferee related that the bill, as approximately 70.0 percent; this estimate is based drafted, presents potential challenges and on the effect of similar legislation and caps ambiguities that would affect OSBC’s ability to enacted in other states. For the fiscal note, the appropriately regulate certain financial products OSBC did not include specific states used to create authorized under the UCCC. She noted several the estimate; however, the agency did indicate provisions in the bill add complexity to the UCCC.

Kansas Legislative Research Department 3-4 2017 Financial Institutions and Insurance She also stated it is unclear how HB 2267 would CONCLUSIONS AND RECOMMENDATIONS interact with the Final Rule and noted the length of the Final Rule’s implementation period. Further, The Committee makes no recommendation the conferee acknowledged, the UCCC needs to be relative to 2017 HB 2267 or introduction of any updated because many consumer credit products legislation affecting certain consumer loan exist today that were not contemplated in 1973 transactions regulated under the UCCC. when the UCCC was first enacted. The Committee notes its discussion on 2017 Comments on HB 2267—opponents. The HB 2267, the UCCC and its present structure, and Committee received testimony from the update and comments submitted by representatives of Advance America, Anderson stakeholders on the small dollar lending Final Rule Financial Services d.b.a. LoanMax, and the recently published by the CFPB. Kansas Community Financial Services Association. Written opponent testimony was ● CFPB Final Rule–implementation submitted by a branch manager for Advance timeline and uncertainty. The Committee America. Opponents addressed the bill’s impact on notes concerns expressed by some the short-term lending industry in Kansas, conferees regarding the uncertainty of the suggesting it would not improve the industry but, regulatory role of the CFPB and the timing rather, would completely eliminate the industry, of modifications to the consumer lending reduce financial choice, and force consumers to provisions of the UCCC, including any turn to costlier, less regulated forms of short-term state legislative action, during the credit. A conferee noted payday loan transaction prescribed 21-month implementation time rates in Kansas are among the lowest in the period for the Final Rule. The Committee country and are as low or lower than those of also recognizes state regulators have not surrounding states, and Kansas has some of the had sufficient time to evaluate the Final strongest pro-consumer protections in statute, Rule and will have the 21-month including military best practices lending implementation period to do so. requirements, forms available in Spanish, 24-hour right of rescission, no loan rollovers, no criminal ● Regulatory review and stakeholder prosecution for bad checks, and a limit of two involvement. The OSBC is encouraged to outstanding loans per customer. A representative hold regular stakeholder meetings to assist for a title loan company testified title loan in drafting changes to the UCCC, in light products provide a reliable, fully regulated source of the CFPB Final Rule and the 21-month of short-term cash and further stated, in the implementation period. The Committee company’s experience, the average loan is less requests regular updates during the 2018 than $560 and the average term of the loan is only Legislative Session, to include review of three months. Customers may pay in full at any any proposed modifications to the UCCC time. A conferee noted the full ramifications of the and implementation concerns for the Final Rule were unknown at the time of the OSBC, lenders, and consumers. meeting, but will be discovered over the 21-month implementation period, which would make statutory changes in 2018 or closer to the actual ○ The Committee’s discussion also implementation date more prudent. Opponents included consumer lending trends and requested the Legislature not proceed with HB practices, including the length of loans 2267 or related legislation at this time. and whether the Final Rule would be applicable to Kansas short-term consumer loan transactions. The Committee also requests further consideration of other trends or practices, such as rolling (or consecutive) loans.

Kansas Legislative Research Department 3-5 2017 Financial Institutions and Insurance Special Committee on Financial Institutions and Insurance

MINIMUM MOTOR VEHICLE LIABILITY INSURANCE

Conclusions and Recommendations

The Committee makes no recommendation relative to 2017 HB 2104 or the introduction of any legislation that would increase the minimum limits of liability for bodily injury and amend provisions relating to uninsured and underinsured motorist coverage to prohibit setoff.

The Committee notes its discussion on 2017 HB 2104, the information provided on prior legislative consideration of the broader topic of uninsured motorists, and available automobile insurance marketplace data and driver data. The Committee also notes the bill continues to reside in the House Committee on Insurance, and the Committee encourages the review of data and analysis from its discussion that is detailed below.

● Stakeholder input. The Committee discussed convening the various groups to determine whether a more comprehensive proposal, not just adjustments to the two bodily injury limits, could be created. The Committee notes past discussions and the difficulty these complex issues present in bringing all parties to the table and reaching compromise.

● Data requested. The Committee expressed interest in seeing more up-to-date and complete numbers from stakeholders to help inform decision-making on this topic. Requested data and analysis from stakeholders would include:

○ Insurance setoff provisions. During discussion on recommendations regarding HB 2104, additional information about available policy data and cost estimates for Oklahoma and Colorado (states with experience with setoff provisions) was requested. The Committee would like to see statistics from states that allow setoffs and comparisons with statistics from states that do not allow setoffs;

○ Health care cost estimates, fiscal impact on government payors. The Committee also expressed interest in bringing health care providers, including hospitals and doctors, into the conversation to discuss what is being written off in terms of uncompensated care, and include what the transfer or “shifted” costs are, especially in the instances of Medicare and Medicaid, and the effect on taxpayers; and

○ Kansas insurance premiums, costs to all policyholders. The Committee requests data on what the automobile liability insurance premiums would be and what the setoff would be separately, then combined, and the effects on all rate payers (i.e., Kansas motorists required to maintain financial responsibility).

Proposed Legislation: None.

Kansas Legislative Research Department 3-6 2017 Financial Institutions and Insurance BACKGROUND topic; comment from the Commissioner of Insurance; a staff review of published data and The charge to the Special Committee on driver data submitted by the Kansas Department of Financial Institutions and Insurance (Committee) Revenue; and formal testimony from proponents was to review and make recommendations on two and opponents on HB 2104. topics assigned by the Legislative Coordinating Council (LCC): legislation affecting certain Topic Overview consumer loan transactions and the Kansas Uniform Consumer Credit Code (2017 HB 2267) History of Kansas law and legislation; and legislation modifying automobile liability recent report. Committee staff reviewed the insurance policy requirements (2017 HB 2104). report of the 2015 Special Committee on The Committee was authorized to meet for one Insurance, which also included a study of day. automobile liability insurance policy requirements. Report information provided included enacted law The Committee was directed to review the and legislation considered relating to the assigned potential impact associated with amendments to topic. Minimum motor vehicle liability insurance the Insurance Code governing automobile liability policy limits were first enacted in 1957 with insurance policies and consider in its review these coverage minimum limits in any one accident of factors: insurance policy pricing and the $5,000 for bodily injury to or death of one person marketplace, including the pricing of auto and $10,000 for bodily injury to or death of two or insurance policies, how policies are sold to Kansas more persons, and $1,000 for harm to or motorists, and how pricing of policies could affect destruction of the property of others. Coverage persons who have difficulty affording compulsory limits, when referenced, often are listed to reflect coverage; estimates and other available data the limits in sequential order and separated by a relating to this topic, including the average slash mark; the 1957 limits would be indicated as premium changes associated with changes to the “$5,000/$10,000/$1,000.” In 1973, enacted Sub. bodily injury liability minimum limits for for HB 1129 included an increase in the limits to policyholders; and data on individuals with $15,000/$30,000/$5,000. In 1974, enacted SB 918 suspended driver’s licenses and other pertinent codified the requirements, which were not driver data. changed, at KSA 40-3107. In 1981, the enactment of SB 371 amended those limits upward to $25,000/$50,000/$10,000, the statutory limits that HB 2104 was introduced by the House continue in effect to date. HB 2231, also Committee on Insurance at the request of introduced in 1981, proposed the same limits as Representative Hodge. The House Committee held 1981 SB 371. In 1984, technical changes were hearings on the bill in February 2017 and heard made to KSA 40-3107; the changes did not affect from proponents, who included private citizens, the policy coverage limits. attorneys representing injured persons, and insurance agents, and from opponents, who included representatives of insurance companies No further legislation related to increasing and an automobile leasing company. On March 16, minimum policy coverage limits was introduced 2017, the House Committee approved a study until the 1989 Legislative Session, when HB 2482 request to be submitted to the LCC. would have increased the minimum coverage limits to $50,000/$100,000/$20,000. A hearing on the bill took place on March 15, 1989, before the COMMITTEE ACTIVITIES House Committee on Insurance, but no further action was taken. Minimum policy coverage limit The Committee met on October 11, 2017, and legislation was introduced in 1995, with SB 369 considered both assigned topics. As part of its proposing an increase in the limits to review of the automobile liability insurance topic, $50,000/$100,000/$20,000. The following year, the Committee received an overview of the HB 2844 was introduced, seeking the same assigned bill; a review of available resources on minimum policy coverage limits sought in 1995. the broader topic of uninsured and underinsured In 1998, SB 634 was introduced by the Senate motorists and prior legislative consideration of the Committee on Judiciary to address minimum

Kansas Legislative Research Department 3-7 2017 Financial Institutions and Insurance policy coverage limits. The bill proposed limits of motorist’s own UIM coverage for a total of $100,000/$200,000/$40,000. The bill was referred $50,000 in coverage. In order to access any to the Senate Committee on Financial Institutions benefits under UIM coverage, the injured motorist and Insurance, but no hearing was held. The bill must have bodily injury damages that exceed the died in Committee. In 2012, HB 2679 was negligent motorist’s liability coverage and the introduced by the House Committee on Insurance. negligent motorist’s available liability coverage The bill would have increased the minimum policy must be less than the injured motorist’s available coverage limits to $50,000/$100,000/$25,000. The UIM coverage. When both motorists have bill was referred to the House Committee on minimum coverage liability policies, no UIM Insurance, but no hearing was held on the bill. The coverage is available to the injured motorist. The bill died in Committee at the end of the 2012 insurer may reduce the policyholder’s UIM Legislative Session. coverage by the limits of the negligent motorist’s insurance coverage, known as a “setoff” or Most recently, 2015 HB 2067 was introduced, “credit.” HB 2104 would eliminate this “setoff,” a hearing was held in the House Committee on so a motorist could access his or her automobile Insurance, and an interim study was requested on liability limits and UIM coverage. the bill. The bill would have raised the limits to $50,000/$75,000/$35,000. The Special Committee According to the Insurance Information on Insurance was tasked with, among other things, Institute (III), approximately 20 jurisdictions reviewing the need to increase minimum motor require UM coverage and only a handful of states vehicle liability insurance policy limits. require motorists to purchase UIM coverage. Committee staff reviewed the report’s findings, Comparative information was presented outlining noting the Special Committee recommended one law, relevant case law, and other guidance for bill for introduction. Its bill, 2016 HB 2446, select states that allow setoff (Alabama, Alaska, addressed one of the three limits—property California, Delaware, Indiana, and Missouri) and damage—increasing this limit from $10,000 to select states that prohibit setoff (Arkansas, $25,000. HB 2446 was passed and enacted during Colorado, and Oklahoma). the 2016 Legislative Session and, in addition to the increase in the property damage limit, the bill Personal automobile liability insurance specified that beginning with the 2026 Legislative marketplace. Committee staff reviewed published Interim and at least every ten years thereafter, comparative data and provided three charts: subject to authorization by the LCC, a legislative interim study committee is required to study ● Top 10 Most Expensive and Least whether the minimum motor vehicle liability Expensive States for Auto Insurance, insurance limits for bodily injury or death of one 2014. Kansas ranks just outside the ten or more persons and for harm to or destruction of least expensive states, with an overall rank property of others should be adjusted. of 39th. The most expensive state, New Jersey, had an average insurance buyer Statutory setoff in Kansas; states’ expenditure of $1,263.67 and the least approaches. Committee staff reviewed provisions expensive state, Idaho, had an average in KSA 40-284(b), which requires Kansas expenditure of $571.94. Kansas’ average motorists to have both uninsured motorist (UM) expenditure was $688.82. Average and underinsured motorist (UIM) coverage. expenditure is equal to the total written Because Kansas motorists are required to have a premium divided by liability car years. A minimum automobile liability insurance of car year is equal to 365 days of insured $25,000 for bodily injury to or death of one person coverage for a single vehicle. [Chart in any one accident, the analyst explained, the source: National Association of Insurance motorist is also required to have $25,000 in Commissioners (NAIC), 2017, data UM/UIM coverage. UIM coverage is insurance published by the III.] the policyholder has with his or her own insurer. However, this does not mean, in the event of an ● Average Expenditures for Auto Insurance accident, a policyholder will access $25,000 from by State, 2010-2014. This chart is an the negligent motorist and $25,000 from the expanded version of the above-described

Kansas Legislative Research Department 3-8 2017 Financial Institutions and Insurance chart and details annual expenditures by insurance-related issues. Calendar year data for three policy components of automobile 2011-2016 are reported below: insurance—liability, collision, and comprehensive coverages—and average ● Traffic convictions for no proof of expenditure by year. For example, the insurance (KSA 2016 Supp. 40-3104 or average expenditure for Kansas of city code equivalent): 2011—12,185; 2012 $688.82 is made up of liability ($354.24), —12,650; 2013—11,411; 2014—11,902; collision ($257.88), and comprehensive 2015—11,177; and 2016—11,116. ($237.67). ● Suspensions due to missed SR 22 filings ○ The analyst also detailed Kansas (administrative action, suspension of average expenditures by year and the license based on report of insurance national average: 2013—$660.28 lapse): 2011—23,624; 2012—21,273; (Kansas)/$866.31 (national); 2012— 2013—19,596; 2014—18,644; 2015— $632.07/$838.49; 2011—$625.92/ 17,845; and 2016—17,056. $795.00; and 2010—$625.17/ $789.29. [Chart source: NAIC, 2017 ● Suspensions due to accident with no (exported data).] insurance (administrative action, ○ The analyst reported archived data th suspension of license and registration indicates Kansas was ranked 6 least because driver/owner/vehicle was expensive, with an average involved in accident and did not have expenditure of $568 in 2007. required insurance): 2011—4,129; 2012— 3,816; 2013—3,240; 2014—2,995; 2015 ● Private Passenger Cars Insured—Shared —2,817; and 2016—3,542. and Voluntary Markets, 2014. Kansas reported 2,286,148 in its voluntary market (able to be insured in the commercial Comment provided by the Commissioner of marketplace) and 1,709 in the shared Insurance. The Commissioner of Insurance market for a total of 2,287,857. This (Commissioner) provided the Committee with a equates to 0.075 percent of insureds in the resource guide on shopping for automobile shared market. Assigned risk plans and insurance policies. (This guide outlines state laws, other similar plans are qualified as shared required and optional coverage, policy (or residual) market. [Chart source: components, and other factors to consider when AIPSO; information exported from III purchasing a policy.) He urged the Committee to website.] use the Kansas Insurance Department (KID) anytime for input, collaboration, and research regarding any insurance topic. He noted KID is Division of Vehicles’ data. Committee staff very concerned about changes that will increase reviewed written testimony submitted by a automobile liability insurance costs and increase representative of the Kansas Department of the uninsured motorist rate. The Commissioner Revenue. The Division of Vehicles (Division) referenced one of three indicators in the data summarized action taken by the Division to KLRD provided (liability insurance premiums) suspend driver’s licenses (all three tables detailed and commented on Kansas’ number being much below) and vehicle registrations (table 3 only). lower than the national average given the current Testimony indicated the data provided could limits. include an individual driver multiple times due to different occurrences. At a higher level, the HB 2104 Division reported, it has 3,237,146 records of violations, failure to meet agreed-to Overview and fiscal information. Committee responsibilities, and actions taken as a result and staff provided the Committee with a summary of 212,335 of them are suspensions. Testimony HB 2104. The bill would amend two statutes indicated some suspensions are associated with relating to motor vehicle liability insurance. The out-of-state drivers and are not specific to bill would amend the law governing UM and UIM

Kansas Legislative Research Department 3-9 2017 Financial Institutions and Insurance coverage (KSA 40-284) to require any automobile insurance agent, three plaintiff’s attorneys, and liability insurance policy renewed, delivered, or two private citizens. One attorney’s presentation issued for delivery on and after January 1, 2018, included testimony from five private citizens. contain a provision with coverage limits equal to Additional written proponent testimony was the limits of liability coverage for bodily injury or submitted by two private citizens. death in such policy sold to the named insured for payment of damages from the uninsured owner or Proponents generally described the minimum operator of a motor vehicle. The bill would limits for automobile liability coverage as outdated provide that any UM coverage must include an and spoke to concerns about the inadequate UIM provision with coverage limits equal to the protection afforded to consumers by this coverage. limits of liability provided by such UM coverage. Proponents pointed to economic changes in the The bill also would specify the amount of past 35 years and commented on the cost shift available UIM coverage shall not be reduced from some motorists onto other motorists, to because of any payment by or on behalf of the health insurers and hospitals, to employers, and to owner or operator of the other motor vehicle or government payors. Proponent testimony also any third party. addressed injured motorists and the inability for an injured person with minimum limits of coverage to The bill also would amend the Kansas access UIM coverage. An attorney noted when Automobile Injury Reparations Act (KAIRA) both drivers have $25,000/$50,000 policies, the (KSA 2016 Supp. 40-3107) to increase the UIM provision pays $0. There may not be enough minimum limit on insurance for bodily injury or to pay all the damage, but due to setoff, an death of one person from $25,000 to $50,000, and individual cannot get the $25,000 amount from his the limit for bodily injury or death of two or more or her own policy, even though they are persons from $50,000 to $100,000, on and after underinsured for their own loss and paid a January 1, 2018. premium for this coverage. He concluded, by increasing limits or eliminating setoff, Kansas can Fiscal impact. According to the fiscal note provide adequate financial security, so bad drivers prepared by the Division of the Budget, KID can pay for the injuries they cause. Private citizens indicates enactment of HB 2104 would likely and their representatives shared similar concerns result in Kansas consumers paying higher about the inability to cover medical bills, missed premiums for motorist insurance coverage. work, and anticipated future medical expenses. However, KID states that any premium increase Without legislative remedy, proponents concluded, would be negligible. In addition, the bill could KAIRA is failing its purpose because Kansans are increase insurance premium taxes collected often left with uncompensated expenses after a collision, even when they are not at fault and have from insurance companies as a result of higher purchased the required auto liability insurance. premiums, reduce insurance premium taxes collected from insurance companies as a result No neutral testimony was submitted. of some consumers choosing not to pay higher premiums and becoming uninsured, or result in a combination of the previous two scenarios. Comments on HB 2104—opponents. The Committee received testimony from KID indicates it cannot estimate the fiscal effect representatives of the American Insurance on insurance premium taxes as a result of Association; Enterprise Leasing Company of enactment of the bill. Any fiscal effect Kansas, LLC; the Kansas Automobile Insurance associated with 2017 HB 2104 is not reflected in Plan; the Property Casualty Insurers Association of The FY 2018 Governor’s Budget Report. America; and the State Farm Insurance Companies. Written opponent testimony was Comments on HB 2104—proponents. The submitted by representatives of Allstate Insurance, following association representatives and American Family Insurance, the Kansas individuals appeared before the Committee and Association of Property and Casualty Insurance provided testimony in support of the bill: Companies, and The General Insurance. representatives of the Kansas DUI Impact Center and the Kansas Trial Lawyers Association, one

Kansas Legislative Research Department 3-10 2017 Financial Institutions and Insurance Opponents indicated Kansas’ financial ● Stakeholder input. The Committee responsibility laws and the established limits discussed convening the various groups to require the Legislature to balance fair limits while determine whether a more comprehensive recognizing minimum limits that become too high proposal, not just adjustments to the two will create affordability problems and cause more bodily injury limits, could be created. The uninsured motorists to be on the road. A Committee notes past discussions and the representative for the state’s residual market (the difficulty the issues present in reaching shared market) indicated the majority of the plan’s compromise. policyholders would face increases, projected at up to 34 percent, for liability coverage that Data requested. The Committee includes the proposed minimums. An opponent ● pointed to the average cost of auto injury claims in expressed interest in seeing more up-to- Kansas and indicated raising the minimum bodily date and complete numbers from injury limits is not needed. An opponent countered stakeholders to help inform decision- the stated concern that policyholders are not making on this topic. Requested data and getting what they paid for (when purchasing analysis from stakeholders would include: required UIM coverage) as false and misleading. The company representative commented if UIM ○ Insurance setoff provisions. During coverage is required by statute, it should be on a discussion on recommendations modified difference-in-limits basis, rather than a regarding HB 2104, additional strict difference-in-limits to ensure that when other information about available policy injured parties are involved and the liability data and cost estimates for Oklahoma insurance limits from the wrongdoer have been and Colorado (states with experience reduced to an amount that is less than the insured’s with setoff provisions) was requested. UIM limits, the insured would still be able to The Committee would like to see recover an amount up to the UIM limits. statistics from states that allow setoffs Opponents urged the Legislature to be cautious and comparisons with statistics from when adjusting the minimum limits and to be states that do not allow setoffs; aware of the unintended consequences of such action. ○ Health care cost estimates and fiscal impact on government payors. The Committee expressed interest in CONCLUSIONS AND RECOMMENDATIONS bringing health care providers, including hospitals and doctors, into The Committee makes no recommendation the conversation to discuss what is relative to HB 2104 or the introduction of any being written off in terms of legislation that would increase the minimum limits uncompensated care, and to include for bodily injury and amend provisions relating to the transfer or “shifted” costs, UM and UIM coverage to prohibit setoff. especially in the instances of Medicare and Medicaid, and the effect on The Committee notes its discussion on 2017 taxpayers; and HB 2104, the information provided on prior legislative consideration of the broader topic of ○ Kansas insurance premiums, costs to uninsured motorists, and available automobile all policyholders. The Committee insurance marketplace data and driver data. The requests data on what the automobile Committee also notes the bill continues to reside liability insurance premiums would be in the House Committee on Insurance, and the and what the setoff would be Committee encourages the review of data and separately, then combined, and the analysis from its discussion that is detailed below. effects on all rate payers (i.e., Kansas motorists required to maintain financial responsibility).

Kansas Legislative Research Department 3-11 2017 Financial Institutions and Insurance SPECIAL COMMITTEE

Report of the Special Committee on Health to the 2018 Kansas Legislature

CHAIRPERSON: Representative Daniel Hawkins

VICE-CHAIRPERSON: Senator Vicki Schmidt

OTHER MEMBERS: Senators Barbara Bollier and Laura Kelly; Representatives Susan Concannon, Jim Kelly, and Monica Murnan

STUDY TOPIC

Study Telehealth and Telemedicine and Consider 2017 Legislation

The Committee is directed to:

● Study the subjects of telehealth and telemedicine in order to increase and improve health care access for all Kansans;

● Review and consider 2017 HB 2206, which addresses coverage of telemedicine in health insurance policies and contracts; and

● Review and consider 2017 HB 2254, which addresses the practice and delivery of telehealth services by certain providers.

December 2017 Special Committee on Health

REPORT

Conclusions and Recommendations

The Committee notes the importance of keeping the patient first when crafting telemedicine legislation.

The Committee does not recommend the 2017 telemedicine legislation currently residing in the House Committee on Health and Human Services (HB 2206 and HB 2254).

The Committee recommends the introduction of comprehensive telemedicine legislation by the parties, to begin in the House, early in the 2018 Legislative Session.

Proposed Legislation: None

BACKGROUND COMMITTEE ACTIVITIES

The Legislative Coordinating Council (LCC) The Committee held all-day meetings on in 2017 appointed a Special Committee on Health October 19 and 20, 2017, at the Statehouse. (Committee), comprised of seven members. The During these meetings, the Committee viewed LCC tasked the Committee with the following: demonstrations of telemedicine technologies; heard testimony from individuals, organizations, ● Study the subjects of telehealth and and providers; and participated in a roundtable telemedicine in order to increase and discussion with select stakeholders. improve health care access for all Kansans; Demonstrations of Telemedicine Technologies ● Review and consider 2017 HB 2206, which addresses coverage of telemedicine On October 19, 2017, representatives of in health insurance policies and contracts; Teladoc, FreeState Healthcare (FreeState), and and HCA Healthcare, Inc. (HCA), provided individual demonstrations of telemedicine technologies. The three entities noted technology is not the issue for Review and consider 2017 HB 2254, ● providing care through telemedicine. However, which addresses the practice and delivery FreeState and HCA representatives expressed the of telehealth services by certain providers. primary roadblock for providing telemedicine services is reimbursement for those services. The Committee was granted two meeting days by the LCC and met on October 19 and 20, 2017, Teladoc. Representatives of Teladoc provided at the Statehouse. the Committee with information and demonstrated Teladoc’s technology for delivering telemedicine services. The representatives noted Teladoc had approximately 75 percent of the total telemedicine business nationally in 2016; Teladoc covers 187,000 Kansans and saved the State

Kansas Legislative Research Department 4-1 2017 Special Committee on Health approximately $4.6 million in 2016; the company parties concerning the delivery of telemedicine in specializes in simple non-emergent care, such as Kansas. Common topics are described in detail sinusitis, upper respiratory infections, influenza, below. poison ivy, and urinary tract infections; approximately 70 percent of Teladoc physicians Medicaid reimbursement for school-based who are Kansas board-certified live in Kansas; services. Representatives of the Kansas Speech- Teladoc is not direct-to-consumer and is available Language-Hearing Association and Kansas only as a benefit through an employer, health plan, Association of Special Education Administrators union, or hospital system; pill shopping is not School Based Tele-Therapy State Task Force, plausible because Teladoc physicians do not and Kansas Association of Special Education cannot prescribe controlled drugs or lifestyle drugs Administrators, and PresenceLearning articulated through the Teladoc system; and Teladoc has a the need for fiscal parity for Medicaid limited Medicaid footprint in Kansas. reimbursement of school-based services. The representatives noted 26 states and the District of FreeState. Representatives of FreeState Columbia have included schools as Medicaid provided the Committee with information and reimbursable locations for telemedicine services. demonstrated FreeState’s technology for Additionally, there is a shortage of speech delivering telemedicine services. The therapists in schools, and permitting Medicaid representatives stated FreeState is a Kansas-based reimbursement for telemedicine services could company and has utilized telemedicine for three alleviate those shortages. years; telemedicine is cost-effective and provides access to care to people who would not otherwise Reimbursement by private payors. receive health care, such as those living in rural Representatives from the Kansas Hospital areas; and it would cost approximately $800,000 Association (KHA) and FreeState noted there is total to put the FreeState telemedicine technology variance of reimbursement for telemedicine in every critical access hospital in Kansas. A services by commercial insurance carriers. representative expressed frustration with reimbursement for provided services. He noted Necessity of consistent, clear telemedicine Medicare and the State’s Medicaid program, definitions. Several representatives noted the KanCare, do pay for these telemedicine services, importance of comprehensive telemedicine policy but FreeState struggles to be reimbursed by private so regulatory boards and law enforcement can insurers. protect Kansans from bad actors. A representative of the Governor’s Behavioral Health Services HCA. Representatives of HCA provided the Planning Council shared her experience with Committee with information on HCA’s setting up a telemedicine practice without clear telemedicine services and demonstrated its legal guidance on telemedicine practices in Kansas technology platform, described as a robot. The and noted mental health professionals and representatives noted reimbursement is the major agencies need legislatively defined telemedicine roadblock for providing care through terms and parameters to develop telemedicine telemedicine; discussed the positive impact of structures and business plans. HCA’s telestroke program; described the licensing and credentialing requirements for physicians Maintaining an active license and insurance participating as a telemedicine provider; and noted requirements for telemedicine providers. A each telemedicine model, such as how the room is representative of the Health Care Stabilization set up is based on the health system or Fund Board of Governors (HCSF) noted organization. telemedicine providers should be required to maintain an active Kansas license and comply Study of Telemedicine – Presentations from with the Health Care Provider Insurance Individuals, Providers, and Availability Act. Organizations Telemedicine provides health care to rural Over the course of the two-day meeting, the areas. A representative of the Kansas Association Committee heard from a variety of interested

Kansas Legislative Research Department 4-2 2017 Special Committee on Health for the Medically Underserved (KAMU) noted stated payment parity stifles innovation and cost telemedicine creates new access to specialty and savings, and decreases the willingness of other providers within the medical home and employers and insurers to fully implement community and is an important solution to the telemedicine services. The representative of Blue health care provider shortage in rural Kansas. A Cross and Blue Shield of Kansas City (Blue KC) physician with the Community Health Center of noted payment parity is a slippery slope and Southeast Kansas expressed the importance of payment parity could have the unintended telemedicine in rural areas. A representative of the consequence of passing costs on to consumers. Kansas Physical Therapy Association noted physical therapy has been successful in providing October 19 testimony. Representatives of the telemedicine services to veterans through the following organizations testified before the Veterans’ Administration and is utilized in rural Committee on October 19, 2017: American areas. Additionally, a representative of Heartland Telemedicine Association (ATA); BCBSKS; Community Health Center noted telemedicine Children’s Mercy Hospital; Community Health helps leverage psychiatry resources in Kansas. Center of Southeast Kansas; Health Care Stabilization Fund; Heartland Community Health Additional benefits of telemedicine. A Center; KAMU; Kansas Health Care Association/ representative of Via Christi Health noted Kansas Center for Assisted Living; Kansas Heart telemedicine allows struggling rural hospitals to and Stroke Collaborative; Kansas Medical Society have the benefit of keeping patients local, which (KMS); Kansas Speech-Language-Hearing captures ancillary services, improves the rural Association and Kansas Association of Special recruitment process, and allows for comprehensive Education Administrators School Based Tele- care at a lower cost. A representative of the Kansas Therapy State Task Force; Kansas Association of Health Care Association and Kansas Center for Special Education Administrators; Kansas State Assisted Living noted telemedicine decreases the Board of Healing Arts; PresenceLearning; rate of re-hospitalizations for the assisted living Teladoc; and Zipnosis. and nursing home population. A representative of Wilson Medical Center shared that telemedicine October 19 written-only testimony. has allowed her to take a weekend off now and Representatives of the following organizations then. provided written-only testimony on October 19, 2017: AARP Kansas; Hospice Services and Coverage parity. The parties agreed that Palliative Care of Northwest Kansas, Inc.; Kansas comprehensive legislation should include coverage Academy of Family Physicians; Kansas Academy parity. Coverage parity prevents the denial of of Nutrition and Dietetics; Kansas Association of claims for covered services because telemedicine Osteopathic Medicine; Kansas Oral Health was used in lieu of an in-person encounter. The Connections; Kansas Public Health Association, representatives noted there are 34 states and the Inc.; Kansas Speech-Language-Hearing District of Columbia with telemedicine coverage Association; and Kansas State Board of Pharmacy. parity laws. Representatives noted parity provides for consumer protection and creates a level of October 20 testimony. Representatives of the assurance to the health care provider. following organizations testified before the Committee on October 20, 2017: Aetna; Blue KC; Payment parity. Although most parties agree Cardinal Health; Eagle Telemedicine; Ellsworth that telemedicine is a useful tool, there was County Medical Center; Governor’s Behavioral disagreement on how to pay for these services. Health Services Planning Council; Kansas Blue Cross and Blue Shield of Kansas (BCBSKS) Association of Masters in Psychology; KHA; and Aetna remarked that insurers typically provide Kansas Physical Therapy Association; Kansas telemedicine benefits on their own, and the State State Alliance of YMCAs; Southeast Kansas should not mandate coverage of these services. Mental Health Center; Sunflower Telemedicine; The Aetna representative noted Aetna’s opposition Susan B. Allen Memorial Hospital; University of to payment parity mandates, and mentioned there Kansas Medical Center for Telemedicine and are no mandates requiring every doctor or hospital Telehealth (KUCTT); Via Christi Health; Wilson to be paid the same. The Aetna representative also

Kansas Legislative Research Department 4-3 2017 Special Committee on Health Medical Center; and Wright Psychological provider, patient, technology, sites of care, Services. or location of the provider in the definition. A Teladoc representative stated October 20 written-only testimony. a broad definition is important because Representatives of the following organizations technology and innovation is faster than provided written-only testimony on October 20, the legislative process. The Aetna 2017: Heartland Telehealth Resource Center; representative stated a broad definition, Hospital District #6, Harper County; Kearny flexible with regulations, would make the County Hospital; and Newton Medical Center. most sense for legislation.

Roundtable Discussion ● A discussion was spurred involving the necessity of interactive two-way audio or The Committee was joined by the following visual technologies. The BCBSKS participants in a roundtable discussion on representative stated it is the position of telemedicine: Chad Austin, Senior Vice President BCBSKS that telemedicine services Government Relations, KHA; Larrie Ann Brown, should be delivered through the Health Legislative Counsel, Teladoc; Rachelle Colombo, Insurance Portability and Accountability Director of Government Affairs, KMS; Denise Act compliant two-way audio or visual Cyzman, Executive Director, KAMU; Coni Fries, technologies, while a Teladoc Vice President of Government Relations, Blue representative noted this framework would KC; Mike Michael, Director, State Employee disenfranchise 500,000 Kansans. The Health Plan; Sunee Mickle, Director of ATA representative concluded that Government Relations, BCBSKS; Dr. Eve-Lynn requiring an interactive component Nelson, Director, KUCTT; Mike Randol, Director would be a step backward, and of Health Care Finance, Kansas Department of explained the use of asynchronous Health and Environment (KDHE); Clark Shultz, “store-and-forward” capabilities. Assistant Commissioner, Kansas Insurance Department; Latoya Thomas, Director of the State Policy Resource Center, ATA; Claudia Tucker, Topic #2 – Legislation: Vice President of Government Affairs, Teladoc; Charles Wheelen, Executive Director, HCSF; ● The Chairperson noted there are currently Andrew Wiens, Policy Director, Office of Kansas two bills residing in the House Committee Lieutenant Governor; Keith Wisdom, Kansas- on Health and Human Services (HB 2206 Nebraska Market President, Aetna; Dr. Shawna and HB 2254). He stated he would prefer Wright, Governor’s Behavioral Health Services for a single bill to be drafted, and Planning Council, Rural and Frontier regulations would likely have to be Subcommittee; and Dr. Elisha Yaghmai, FreeState. adopted by related agencies. He then asked the roundtable participants their Topics Discussed and Issues Identified views on the 2017 telemedicine legislation. Topic #1 – Definitions of Telemedicine and Telehealth: ● The KMS representative asked that any new legislation prohibit an insurer from ● The stakeholders discussed the importance excluding an otherwise covered health of a broad, flexible definition for care service from coverage solely because telemedicine. The ATA representative the service is provided through noted ATA uses both telemedicine and telemedicine or telehealth rather than in- telehealth interchangeably, and is defined person contact to ensure broader access to as “health care services provided from one telemedicine. location to another location through the use of telecommunications.” The ATA representative noted ATA leaves the ● The KMS representative also discussed definition broad and does not include the 2017 HB 2254 specifically and requested portions relevant to a physician’s scope of

Kansas Legislative Research Department 4-4 2017 Special Committee on Health practice and ensuring the standard of care ● The FreeState representative noted is the same and informed consent be concern with not including reimbursement included in legislation. parity in legislation and stated Medicaid and Medicare have 100 percent payment ● The KMS representative further stated parity and those models should be utilized. KMS would prefer the reimbursement provision of 2017 HB 2206 be retained in ● The ATA representative noted, in the last new legislation. The KMS representative four to five years, states have strayed also requested provisions related to away from legislating reimbursement medical history, jointly developed rules parity. and regulations with the State Board of Pharmacy concerning controlled The KDHE representative stated KDHE substances and prescribing through ● telemedicine, and references to follow-up does not pay a different amount for an in- care and continuity of care be included. person visit versus a telemedicine visit.

Participants discussed facility fees and ● The ATA representative encouraged State ● officials to not create two competing provider fees. The KHA representative standards for health care professionals. requested clarification on if the pieces of 2017 legislation would cover both facility and provider fees. The KAMU ● A Committee member requested the representative noted current policy is Office of Revisor of Statutes include vague, especially related to originating language in legislation requiring rules and sites, and payment parity would provide regulations to be adopted by required necessary clarity. agencies by a date certain.

Topic #3 – Coverage and Reimbursement CONCLUSIONS AND RECOMMENDATIONS Parity: Following discussion, the Committee made On this topic, the parties discussed both ● the following recommendations: coverage and reimbursement parity (reimbursement parity is also known as ● The Committee notes the importance of payment parity, and these terms are used keeping the patient first when crafting interchangeably). legislation;

● The Aetna representative expressed a ● The Committee does not recommend the broad definition of telemedicine would 2017 telemedicine legislation currently give the most flexibility and suggested residing in the House Committee on that regulating payment would be difficult Health and Human Services (HB 2206 and if the legislation is broad. HB 2254); and

● The Chairperson stated coverage parity ● The Committee recommends the would be included in the legislation, but introduction of comprehensive suggested bill language would likely state telemedicine legislation by the parties, to the payor and provider would negotiate begin in the House, early in the 2018 the reimbursement rate. Legislative Session.

Kansas Legislative Research Department 4-5 2017 Special Committee on Health SPECIAL COMMITTEE

Report of the Special Committee on Utilities to the 2018 Kansas Legislature

CHAIRPERSON: Senator Robert Olson

VICE-CHAIRPERSON: Representative Joe Seiwert

OTHER MEMBERS: Senators Tom Hawk and Mike Petersen; and Representatives Randy Garber, Annie Kuether, and Mark Schreiber

STUDY TOPIC Study and Make Recommendations Regarding Rural Broadband Deployment The Committee is directed to identify ways to get broadband services deployed to all Kansans at affordable rates, including, but not limited to, discussion of the following topics: ● Consider incentives for broadband deployment in unserved and underserved areas of the state;

● Consider whether guidelines should exist regarding overbuilding an existing provider in order to reach and affordably serve unserved and underserved Kansans;

● Define “unserved” and “underserved” in terms of broadband speeds, affordability, and length of time a digital divide between urban and rural areas should exist because advanced delivery technologies are not installed;

● Establish what technologies should be supported as appropriate to deliver reliable, affordable broadband in Kansas; and

● Identify what actions the State can take to facilitate development of competitive broadband markets in rural areas, including incentives for partnerships between communities, rural electric cooperatives, incumbent providers, and alternative providers.

December 2017 Special Committee on Utilities

REPORT

The Special Committee on Utilities was not convened during the 2017 Interim.

Kansas Legislative Research Department 5-1 2017 Utilities JOINT COMMITTEE

Report of the Joint Committee on Corrections and Juvenile Justice Oversight to the 2018 Kansas Legislature

CHAIRPERSON: Representative J. Russell Jennings

VICE-CHAIRPERSON: Senator Molly Baumgardner

RANKING MINORITY MEMBER: Representative Dennis “Boog” Highberger

OTHER MEMBERS: Senators Ed Berger, Oletha Faust-Goudeau, Pat Pettey, Mary Pilcher-Cook, Mary Jo Taylor, and Rick Wilborn; and Representatives Larry Campbell, Sydney Carlin, Leo Delperdang, Gail Finney, and Susan Humphries

CHARGE

KSA 2017 Supp. 46-2801 directs the Committee to monitor inmate and juvenile offender populations and to review and study the programs, activities, plans, and operations of the Kansas Department of Corrections. In addition, the Committee is to study:

● Implementation of juvenile justice reform;

● Offense proportionality in the adult sentencing grid; and

● The impact of juvenile immediate intervention programs (diversions) and adjudications on future employment and their use for impeachment of witnesses (review and consider Judicial Council Report on 2017 HB 2352).

December 2017 Joint Committee on Corrections and Juvenile Justice Oversight

ANNUAL REPORT

Conclusions and Recommendations

The Joint Committee recommended:

● The House Committee on Appropriations and the Senate Committee on Ways and Means consider a plan to restore $1.5 million in funding for inmate treatment programs in state institutions for each of the next three years;

● The House Committee on Corrections and Juvenile Justice not pass HB 2352 as proposed or as amended, but continue to study the issue and consider legislation changing how juvenile dispositions are treated with regard to future application of the offender;

● The House Committee on Corrections and Juvenile Justice monitor the state budget and, if possible, recommend passage and funding of 2017 HB 2087, HB 2088, and HB 2090, concerning modifications to the SB 123 program;

● The House Committee on Corrections and Juvenile Justice recommend to the full House a bill similar to 2017 HB 2092, aligning all financial loss crimes with the current threshold of $1,500;

● The Joint Committee on State Building Construction and the State Finance Council delay the process for approving construction at the Lansing Correctional Facility until February 15, 2018, to give the Legislature an opportunity to more fully vet and approve plans for construction;

● The House Committee on Corrections and Juvenile Justice and the Senate Committee on Judiciary meet jointly to discuss human trafficking with input from the Attorney General’s Human Trafficking Advisory Board, representatives of the Wichita State University Center for Human Trafficking, and other stakeholders;

● The House Corrections and Juvenile Justice and Senate Judiciary Committees continue to study possible changes to Kansas’ Romeo and Juliet laws; and

● The Kansas Sentencing Commission reconvene its proportionality committee and make recommendations based on the category and severity of crimes to the 2018 Joint Committee on Corrections and Juvenile Justice Oversight and the 2019 Legislature.

The Joint Committee also recommended sending letters to Chief Justice Lawton Nuss concerning implementation of multidisciplinary teams required to be appointed pursuant to KSA 2016 Supp. 38-2393; the Secretary for Children and Families concerning the placement of runaways and status offenders in detention; and the Secretary of Corrections asking for more detail on the substantial increase in capacity at El Dorado Correctional Facility without the need for additional staff.

Kansas Legislative Research Department 6-1 2017 CJJO Proposed Legislation: The Committee requests legislation to:

● Stay limits on overall case lengths for juvenile offenders who abscond from supervision such that the case timeline does not begin until the dispositional order is entered;

● Clarify a fee may be assessed as part of applications under the Immediate Intervention Program, specify the fee shall not exceed $100, and allow juvenile corrections advisory boards to determine the amount of the fee;

● Amend KSA 2017 Supp. 75-52,161(d)(7) to change “calculate” to “monitor,” as requested by the Juvenile Justice Oversight Committee; and

● Allow a juvenile’s attorney to waive appearance at the 14-day detention review hearing in KSA 2017 Supp. 38-2343, or allow the juvenile to appear via audio-video communications.

BACKGROUND vice-chairperson is a Senate member; in even years, the chairperson and ranking minority The 1997 Legislature created the Joint member are Senate members and the vice- Committee on Corrections and Juvenile Justice chairperson is a House member. Oversight to provide legislative oversight of the Kansas Department of Corrections (KDOC) and The Committee’s duties, as outlined in KSA the Juvenile Justice Authority (JJA). Pursuant to 2017 Supp. 46-2801(k), are to monitor the inmate Executive Reorganization Order No. 42, on July 1, population and review and study KDOC’s 2013, the jurisdiction, powers, functions, and programs, activities, and plans regarding its duties of the JJA and the Commissioner of statutorily prescribed duties, including the Juvenile Justice were transferred to KDOC and the implementation of expansion projects; the Secretary of Corrections. Statewide, there are eight operation of correctional, food service, and other correctional facilities: El Dorado Correctional programs for inmates; community corrections; Facility (EDCF), Ellsworth Correctional Facility, parole; and the condition and operation of the Hutchinson Correctional Facility, Lansing correctional institutions and other facilities under Correctional Facility, Larned Correctional Mental KDOC’s control and supervision. The Committee Health Facility, Norton Correctional Facility, is also charged to review and study the adult Topeka Correctional Facility, and Winfield correctional programs, activities, and facilities of Correctional Facility. KDOC also operates parole counties, cities, and other local governmental offices throughout the state and is responsible for entities, including the programs and activities of the administration of funding and oversight of private entities operating community correctional local community corrections programs. programs and facilities, and the condition and operation of jails and other local governmental There is one operational juvenile correctional facilities for the incarceration of adult offenders. facility (JCF): Kansas Juvenile Correctional Complex. Individuals as young as 10 and as old as Similarly, the Committee is charged to review 17 years of age may be adjudicated as juvenile and study programs, activities, and plans involving offenders (JOs) and remain in custody in a JCF to JOs, including the responsibility for their care, age 22.5 and in the community to age 23. custody, control, and rehabilitation, and the condition and operation of the JCFs. Further, the The Committee is comprised of 14 members, Committee is charged to review and study the JO with 7 members each from the House and the programs, activities, and facilities of counties, Senate. In odd years, the chairperson and ranking cities, school districts, and other local minority member are House members and the governmental entities, including programs for the reduction and prevention of juvenile crime and

Kansas Legislative Research Department 6-2 2017 CJJO delinquency; programs and activities of private The Secretary also spoke about KDOC entities operating community juvenile programs programs and provided a graph showing the and facilities; and the condition and operation of funding available for such programs from 2008 to local governmental residential or custodial 2018. He reviewed the unmet needs of programs, facilities for the care, treatment, or training of JOs. noting the graph shows GED and vocational training programs combined with sustained employment result in significant reductions in COMMITTEE ACTIVITIES recidivism.

The Committee requested three meeting days The Secretary discussed the mental health and was granted two by the Legislative needs of inmates, indicating 39 percent of adult Coordinating Council. In addition to its statutory inmates have identified mental illnesses. KDOC’s duties, the Committee was charged to study the goal is to help this population transition into the following topics: community as opposed to going to a mental health facility. The Secretary noted the addition of high- ● Implementation of juvenile justice reform; acuity behavior health beds at the EDCF in FY 2017 and FY 2018 and described how these units ● Offense proportionality in the adult work with newly developed restrictive housing sentencing grid; and diversion programs for offenders with serious mental illness. He also noted a plan at Lansing to ● The impact of juvenile immediate add similar beds and staff training provided intervention programs (diversions) and through the American Correctional Association’s adjudications on future employment and Correctional Behavior Health Certification their use for impeachment of witness Program. (review and consider Judicial Council Report on 2017 HB 2352). The Secretary discussed 2017 turnover rates and recent pay raises, noting turnover rates are a correctional issue nationally, not just a local issue. The Committee met November 1 and 2, 2017. He presented information showing EDCF has the highest turnover at 46.11 percent, and Winfield November 1 Correctional Facility has the lowest at 25.38 percent. The Secretary continued by discussing KDOC Operations positive signs at EDCF, including fewer open positions after the pay raise. He provided a The Committee began with an update snapshot of other states’ salaries compared to their regarding KDOC operations provided by the turnover rates and stated private facilities with Secretary of Corrections (Secretary). The higher pay rates also have vacancies and staffing Secretary discussed efforts toward population issues. Data showed turnover rates were high management, including the use of double bunking across all prisons, whether operated by the State or to increase adult bed space capacity. He stated the a private company. The Secretary stated one of his EDCF added 660 beds through double bunking, biggest concerns about high turnover is the level and he discussed the costs associated with the of experience that goes along with this, noting additional beds, including the avoidance of costly 52.94 percent of staff have less than two years of construction. He presented a graph showing that, experience. He provided slides that show specific from 2013 to 2016, there were more inmates than correctional officer pay, including the difference in beds, and in 2017 the number of beds available pay for uniformed and non-uniformed positions will be more than is needed due to this change. that require a bachelor’s degree. This shows a The Secretary noted that in October 2017, an disincentive for staff to move into higher Association of State Correctional Administrators responsibility positions as the pay rates are similar. survey showed 39 state correctional agencies cited lack of space due to cell size as the reason for not The Secretary also presented information on utilizing double-bunked cells. the serious incidents at EDCF in 2017 and gave a brief update on the contract process for

Kansas Legislative Research Department 6-3 2017 CJJO construction at the Lansing Correctional Facility. The Deputy Secretary discussed reinvestment The Secretary stated he hoped to complete in community-based services and funding for contract negotiations this month [November] and specific statewide contracts, such as functional present to the budget committees for further family therapy, sex offender assessment and approval. He said KDOC hoped to award a treatment, and moral reconation therapy. The contract in December and start construction in Deputy Secretary detailed efforts to build on pilot May or June, and KDOC estimates completion projects that began as early as 2013, investing in a after 18 months, in December 2019. core group of evidence-based programs accessible by all counties. He also reviewed new grant Committee members expressed concerns funding for community-based services, listed about a possible correlation between double dollar amounts for approved Reinvestment Grants, bunking and the EDCF incident and a lack of and provided total amounts of reinvested dollars. additional staff while capacity had increased significantly. The Secretary stated he did not Finally, the Deputy Secretary discussed believe there was a correlation, noting the inmates training and stated it is essential to implementation are not new to double bunking. Further, at Larned of evidence-based programs and practices, noting Correctional Mental Health Facility, staff have KDOC had provided more than 9,500 hours of found double bunking in the mental health training in FY 2017. population decreased suicide rates. Committee members also asked questions about the Lansing Prisoner Review Board Correctional Facility construction project and the savings the project is meant to capture, noting The Chairperson of the Prisoner Review concerns about Lansing’s turnover rate, the Board presented testimony on the Board’s primary availability of staff to fill vacancies, and other work areas, including parole suitability hearings, long-term issues. Given these concerns, members final violation hearings and revocation waiver asked what the impact would be if there were a review, special conditions of post-incarceration delay in the project to allow more time to look at supervision, and other file reviews such as pardon, these issues. The Secretary identified issues such discharge, functional incapacitation, and medical as the cost of materials going up, noting the release. He also provided data on specific offender estimated increase for next year is 5 or 6 percent. populations; parolees; public forums for those eligible for parole; final violation hearings, Juvenile Services and Ongoing including offender rights and standard of proof Implementation of Juvenile Justice information; and other file reviews, such as Reform revocation hearings.

The Deputy Secretary of Corrections (Deputy The Chairperson of the Prison Review Board Secretary) discussed the multi-year process of responded to questions from Committee members implementing the juvenile justice reforms of 2016 concerning repeat offenders, parole supervision, SB 367 and 2017 House Sub. for SB 42 and noted program participation and completion as a factor Kansas is in the 17th month of this process. The in the release determination, and whether lack of Deputy Secretary reviewed the scope of reform access to these programs has hindered offenders and implementation research, updated the being released. Committee on juvenile services’ contributions to implementation of those reforms, highlighted data Ongoing Implementation of Juvenile Justice trends in juvenile justice and efforts to increase Reform data capacity, and recognized the efforts of the many stakeholders who are reforming the system. The Director of Trial Court Programs (Trial The Deputy Secretary also discussed strengthening Court Programs Director), Office of Judicial community supervision to align with the bills and Administration (OJA), discussed Judicial Branch noted examples, such as an emphasis on program efforts toward implementation of 2016 SB 367. or services delivery, while reducing the use of The Trial Court Programs Director also serves as standard contacts in probation work and graduated chairperson of the SB 367 Judicial Branch responses and incentives.

Kansas Legislative Research Department 6-4 2017 CJJO Implementation Team and the OJA representative with the rolling dates in the bill; inability to share on the Juvenile Justice Oversight Committee. She the entirety of the KDAI with the court as provided updates on collaborating with KDOC, requested; lack of consensus surrounding the IIP; the Supreme Court’s approved graduated response loss of funds for detention center operation costs grid, the earned discharge credit, the inter-rater with the replacement of the Juvenile Detention reliability and validation study, and the Facility Fund with the Alternatives to Detention development and implementation of the detention Fund; and lack of a state data exchange risk assessment tool. The Trial Court Programs contemplated by the law. Director also presented updates on new training protocols for judges, county and district attorneys, The Chairperson of the Juvenile Justice and defense attorneys and court service officers. Oversight Committee (JJOC) presented an update from the JJOC. The JJOC Chairperson emphasized A representative of the Kansas Community implementation of the report will take time and Corrections Association (KCCA) endorsed the that, while not everyone is happy with SB 367, he impact of SB 367, but emphasized the need for hopes everyone will work on implementing the sustained funding of community-based programs bill as enacted and improving on it. He noted he as the legislation has eliminated other options. does not have the authority to ensure all agencies Additionally, the KCCA identified the following are working towards this implementation. The concerns: a lack of services targeted at lower-risk JJOC Chairperson stated his only suggested youth and consistency and availability of services change to the law would be to not ask the JJOC to statewide, particularly in rural areas; a lack of calculate anything, but rather to let the agencies emergency placement options for youth who themselves do their own calculations. cannot return to their homes and the possibility some youth are diverted to the child welfare A representative of the Kansas County and system; scheduling, transportation, and cost issues District Attorneys Association (KCDAA) related to the 14-day hearing required for virtually discussed concerns with the ability to place an every youth in detention; conflicts between KDOC offender in secure detention, case and probation procedures and forms concerning the Immediate term limits, waiver to adult status and extended Intervention Program (IIP) and district attorney juvenile jurisdiction prosecution, the detention risk concerns that these forms violate legal authority assessment tool, and co-occurrence of child in and responsibilities, as well as possible statutory need of care and juvenile offenses and conflicts with IIP standards; and the utility of the recommended amendments in each of these areas. response grid. Adult Inmate Prison Population Projections A representative of Riley County Community Corrections stated “the premise behind SB 367 . . . The Executive Director of the Kansas was long overdue in Kansas,” but also identified Sentencing Commission presented information on the following concerns: limited access to adequate current prison population characteristics; changes records to complete the Kansas Detention in population from FY 2016 to FY 2017; five-year Assessment Instrument (KDAI), particularly prison admission trends; information on guideline during non-business hours; lack of emergency new commitments; a comparison of admission placement options; delays in implementing types from FY 2016 and FY 2017 for males and multidisciplinary teams; inability to immediately females; information on parole and post-release impose graduated responses; and a lack of supervision condition violators; and adult prison resources for cognitive-behavioral programs in population trends and projections. Projections small- to mid-sized districts. indicate population will exceed capacity within the ten-year projection window. A representative of Juvenile Services for the Sedgwick County Division of Corrections stated Proportionality in the Sentencing Grid he agreed with the Riley County representative and identified additional problematic areas in The Executive Director of the Kansas implementation of SB 367, including the lack of Sentencing Commission also presented training and coordinated implementation in line information on proportionality of sentences within

Kansas Legislative Research Department 6-5 2017 CJJO Kansas statutes. He presented information on the Romeo and Juliet Laws Sentencing Commission’s efforts on this issue, beginning in 2007, when the Kansas Criminal Representative Highberger addressed the Code Recodification Commission asked the Committee about the current Romeo and Juliet law Sentencing Commission to review proportionality, in Kansas, how it can still negatively impact to the present time. The Executive Director stated youth, and the need to change the current the Sentencing Commission recommends it language. Romeo and Juliet statutes generally reestablishes a proportionality committee to study provide lesser penalties for minors who engage in the issue in preparation for the 2019 Legislative voluntary sexual conduct. Staff of the Kansas Session as well as collaborate with stakeholders to Legislative Research Department presented explore merging grids. A representative of the information on these laws in other states and KCDAA also provided testimony on identified different approaches in other states. proportionality issues in the Kansas Criminal Code and indicated the KCDAA and its members are in A concerned citizen and parent spoke about the position to assist if needed or asked. his concerns that under current Kansas law, a minor can be convicted of a felony for consensual Preliminary Committee Comments and sexual exploration. He shared details of how his Recommendations son was almost convicted of such a crime and how it has affected his son’s life. A Committee member expressed her interest in the issue of eliminating human trafficking, A representative of the Kansas Association of asked whether the Committee should be involved, Criminal Defense Lawyers presented testimony on and recommended the founder and Executive the Association’s belief that laws need to change in Director of the Wichita State University Center for order to address the penalties youth suffer for Combating Human Trafficking. Committee consensual acts with other youth. She presented members stated their interest in joint informational information on the current law, the changes hearings. proposed in 2017 HB 2290, and areas of the law on which the Association encourages discussion. November 2 Specifically, Romeo and Juliet laws do not include such acts as texting or electronic solicitation. Impact of Juvenile Adjudications and Diversions Efforts to Address Opioid Abuse in Kansas

The Chairperson of the Kansas Judicial The Kansas Attorney General provided Council’s Criminal Law Advisory Committee testimony on Kansas’ and national efforts to presented the Judicial Council’s report on 2017 address the opioid abuse crisis. He noted HB 2352, which was approved by the Judicial methamphetamine remains the most problematic Council on October 17, 2017. The report substance abuse issue in Kansas, and he asked recommends against the passage of HB 2352 in its lawmakers to focus on efforts to ensure opioid original form or as amended, noting the barrier is abuse in Kansas does not reach epidemic levels as in the regulations governing the certification of it has in other areas of the country. The Attorney law enforcement officers, as well as some General also discussed efforts to dispose of unused constitutional issues, and amending KSA 60-421 medications, legislative changes to opioid would not change that. overdose-reversal medication laws, encouraging insurance companies to review related policies, Two private citizens presented testimony and urging congressional leaders to make concerning how a juvenile adjudication has limited treatment for drug addiction more affordable and future employment opportunities, specifically accessible by passing new legislation in the employment as a law enforcement officer. A Medicaid program, specifically the “Road to Committee member identified the issue of sealing Recovery Act.” records as another approach.

Kansas Legislative Research Department 6-6 2017 CJJO Legislation to Expand the SB 123 Program via 2017 HB 2087, HB 2088, and HB 2090, but also acknowledging the current state budget may The Executive Director of the Kansas not be able to fully fund these three bills, the Sentencing Commission presented testimony on Committee recommends the House Committee on legislation expanding the SB 123 program. He Corrections and Juvenile Justice monitor the state explained the program’s mission to ensure public budget and, if possible, recommend passage and safety while effectively addressing recidivism by funding of the bills. providing community-based substance abuse treatment to targeted, non-violent drug offenders. Given the long-term impact of construction on He also described 2017 legislation introduced by state operations, the lack of transparency in the the Sentencing Commission: HB 2087, HB 2088, bidding process, and notwithstanding the proviso and HB 2090. in 2017 HB 2052 Sec. 39 concerning the sale of certain property in Leavenworth County, the Committee recommends the Joint Committee on CONCLUSIONS AND RECOMMENDATIONS State Building Construction and the State Finance Council delay the process for approving As information from KDOC indicates, a construction at the Lansing Correctional Facility significant number of offenders are in need of and until February 15, 2018, to give the Legislature an would benefit from treatment programs provided opportunity to more fully vet and approve plans in the state correctional facilities as funds for such for construction. Specifically, consideration should programs have been reduced in recent years. The be given to whether Lansing is the appropriate Committee recommends the House Committee on location for the construction, the availability of Appropriations and Senate Committee on Ways sufficient staff and competitive pay for such staff, and Means consider a plan to restore funding for the potential cost avoidance or savings, and how inmate treatment programs in Kansas institutions the project will be funded until these savings are in the amount of $1.5 million each over the next realized. three years. Funds could be used for vocational programs, including those involving partnerships The Committee recommends the standing with private industries, and should be used to House Committee on Corrections and Juvenile provide programs recommended for inmates to be Justice and the Senate Committee on Judiciary eligible for parole. In the event such meet jointly to discuss human trafficking with appropriations are made, the Committee requests input from the Attorney General’s Human the Secretary of Corrections report to the 2018 Trafficking Advisory Board, representatives of the Joint Committee on Corrections and Juvenile Wichita State University Center for Human Justice Oversight on how those funds are being Trafficking, and other stakeholders. used to implement and expand programs. The Committee requests the Kansas In light of the report provided by the Kansas Sentencing Commission reconvene its Judicial Council, the Committee recommends the proportionality committee and make House Committee on Corrections and Juvenile recommendations based on the category and Justice not pass 2017 HB 2352 as proposed or as severity of crimes to the 2018 Joint Committee on amended, but should continue to study the issue Corrections and Juvenile Justice Oversight and the and consider legislation changing how juvenile 2019 Legislature. dispositions are treated with regard to future application of the offender. As part of its Similarly, the Committee recommends the consideration, the House Committee should House Committee on Corrections and Juvenile consider information on how other states have Justice recommend for passage a bill similar to addressed these issues, including automatic 2017 HB 2092, aligning all financial loss crimes expungement and the potential financial impact of with the current threshold of $1,500. During the these reforms. 2017 Legislative Session, the House Committee recommended the bill favorably for passage; Given the potential cost avoidance that would result from modifications to the SB 123 program

Kansas Legislative Research Department 6-7 2017 CJJO however, the bill was enacted without its original burnout, turnover, and violent episodes contents. within the facilities; and encouraging the Secretary to ask for additional staffing if The Committee recommends the House needed. In addressing capacity issues, the Committee on Corrections and Juvenile Justice Committee encourages KDOC to consider and the Senate Committee on Judiciary continue to electronic surveillance, as permitted by study possible changes to Kansas’ Romeo and law, to help ease demand for lower Juliet laws, with Representative Highberger security beds and to inform the Legislature helping to develop background information to of any necessary changes of law to bring about a thoughtful change. facilitate creation or expansion of such programs. The Committee will send letters (included in the appendix to this report) to: The Committee requests legislation to: The Kansas Chief Justice, explaining ● ● Stay limits on overall case lengths for concerns had been brought to the juvenile offenders who abscond from Committee about implementation of supervision such that the case timeline multidisciplinary teams required to be does not begin until the dispositional order appointed pursuant to KSA 2017 Supp. is entered and, in the event a juvenile 38-2393; encouraging judicial districts to absconds, time does not toll until the comply with this part of the law in order juvenile is found and brought back to the to execute the law uniformly across the jurisdiction; state; and requesting a report by February 1, 2018, of any progress or failure of districts to perform as required under the ● Clarify a fee may be assessed as part of law; applications under the Immediate Intervention Program; specify the fee shall not exceed $100; provide that in the event The Secretary for Children and Families ● a juvenile is unable to pay the fee in concerning the placement of runaways and whole, the juvenile may negotiate to pay a status offenders in detention; reminding portion of the fee or participate in the Secretary of the fast-approaching community service to satisfy the implementation date of July 1, 2019, and obligation; prohibit KDOC from reducing the need for short-term care for children in the amount of grants awarded by the need of care who fall in this category; amount of fees collected and from stating the Committee expects the transferring funds to KDOC or the State Department for Children and Families General Fund; and allow juvenile (DCF) and its contractors to be prepared corrections advisory boards to determine to implement the law; and strongly the amount of the fee; encouraging DCF to find a permanent solution for how it provides necessary services to runaways and victims of ● Amend KSA 2017 Supp. 75-52,161(d)(7) human trafficking; and to change “calculate” to “monitor,” as requested by the JJOC; and ● The Secretary of Corrections asking for more detail on the substantial increase in ● Allow a juvenile’s attorney to waive capacity at EDCF without the need for appearance at the 14-day detention review additional staff; expressing concerns that a hearing in KSA 2017 Supp. 38-2343, or lack of staffing will lead to further allow the juvenile to appear via audio- video communications.

Kansas Legislative Research Department 6-8 2017 CJJO JOINT COMMITTEE

Report of the Joint Committee on Information Technology to the 2018 Kansas Legislature

CHAIRPERSON: Representative Blake Carpenter

VICE-CHAIRPERSON: Senator Mike Petersen

OTHER MEMBERS: Senators Marci Francisco, Tom Holland, Dinah Sykes, and Caryn Tyson; and Representatives Pam Curtis, Keith Esau, Kyle Hoffman, and Brandon Whipple

CHARGE

The Committee is directed to: ● Review, monitor, and report on technology plans and expenditures;

● Review and monitor state agency and institution technology plans and expenditures;

● Make recommendations to the Senate Committee on Ways and Means and House Committee on Appropriations on implementation plans, budget estimates, and three-year strategic information technology plans of state agencies and institutions;

● Evaluate the status of the Kansas Eligibility Enforcement System project;

● Evaluate the status of cybersecurity preparedness within the State;

● Follow up with the Kansas Department of Commerce on activity related to the data breach that occurred in March 2017;

● Allow members of the private sector to present relevant information to the Committee; and

● Review information technology security reports and information technology project reports, in executive session, from the Legislative Division of Post Audit.

December 2017 Joint Committee on Information Technology

ANNUAL REPORT

Conclusions and Recommendations

The Committee agreed on the following recommendations to the 2018 Legislature:

● Request the Office of Information Technology Services (OITS) present a clear roadmap for the process of mandating actions to improve cybersecurity for state agencies. OITS should ensure the roadmap treats all agencies fairly;

● Request OITS include in its plans the expectation that, if agencies are given the option to take control of their own cybersecurity efforts, agencies be required to consent to a cybersecurity responsibility statement, which would specify actions necessary to improve cybersecurity within each agency and identify individuals within each agency responsible for oversight of cybersecurity activities;

● Elevate the relevance of the cybersecurity discussion, the importance of preventative action, and the responsibility of the State to protect the data entrusted to the State by its citizens;

● Determine how agencies may implement any changes necessary to improve cybersecurity;

● Continue investigation into what needs to be accomplished to allow archiving of the livestream of committee hearings held in the Old Supreme Court Room;

● Enable OITS to provide oversight beyond the initial stages of a project;

● Encourage OITS to develop more tools that will provide better project portfolio management, such as automated reporting tools and software, and work toward better collaboration and integration of systems to avoid duplicative projects; and

● Schedule a meeting of the Joint Committee on Information Technology early in the 2018 Session to consider OITS’ proposed roadmap for information technology security and make recommendations for legislative action in the 2018 Session, including discussion on 2017 HB 2331 and 2017 SB 204.

Proposed Legislation: None

BACKGROUND 2101 et. seq. The Committee may set its own agenda, meet on call of its Chairperson at any time The Joint Committee on Information and any place within the state, and introduce Technology (Committee) has statutory duties legislation. The Committee consists of ten assigned by its authorizing legislation in KSA 46- members: five senators and five representatives.

Kansas Legislative Research Department 7-1 2017 Information Technology The duties assigned to the Committee by KSA estimates and revisions and the three-year plans 46-2102 and by KSA 2017 Supp. 75-7201 et seq. and the deviations, and then to make are as follows: recommendations to the Committee regarding the merits of and appropriations for the projects. In ● Study computers, telecommunications, addition, the Executive and Judicial CITOs are and other information technologies used required to report to the Legislative CITO the by state agencies and institutions. The progress regarding implementation of projects and state governmental entities defined by proposed expenditures, including revisions to such KSA 2017 Supp. 75-7201 include proposed expenditures. executive, judicial, and legislative agencies and Board of Regents institutions; COMMITTEE ACTIVITIES

● Review proposed new acquisitions, The Committee met during the 2017 Interim, including implementation plans, project as authorized by the LCC, on September 8 and 22, budget estimates, and three-year strategic 2017. In addition to these interim meetings, the information technology (IT) plans of state Committee met during the 2017 Session on March agencies and institutions. All state 23, May 3, and May 10, 2017. In addition, the governmental entities are required to Committee toured the Kansas Intelligence Fusion comply with provisions of KSA 2017 Center jointly with the House Committee on Supp. 75-7209 et. seq. in submitting such Government, Technology, and Security on May information for review by the Committee; 23, 2017.

● Monitor newly implemented technologies March 23 of state agencies and institutions; The Executive CITO presented the most recent Kansas Information Technology Office (KITO) ● Make recommendations to the Senate quarterly report of IT projects and explained why Committee on Ways and Means and the four projects were in “alert” status. Members House Committee on Appropriations on posed questions to the Chief Information Officer implementation plans, budget estimates, (CIO) of the Kansas Department of Health and and three-year plans of state agencies and Environment (KDHE) regarding the Medicaid institutions; and Management Information System modernization project. The CIO also briefly outlined the history ● Report annually to the Legislative of the Kansas Eligibility Enforcement System Coordinating Council (LCC) and make (KEES) and provided a status update on that special reports to other legislative project. The Committee also elected a new committees as deemed appropriate. Chairperson and Vice-chairperson.

May 3 In addition to the Committee’s statutory duties, the Legislature or its committees, including The CIO of KDHE provided a more thorough the LCC, may direct the Committee to undertake update on KEES. The CIO explained that the special studies and to perform other specific major challenge in implementing the system has duties. been integrating the older legacy systems into KEES. The CIO then answered several questions KSA 2017 Supp. 75-7210 requires the posed by members. legislative, executive, and judicial chief information technology officers (CITOs) to submit In a closed (executive) session, representatives annually to the Committee all IT project budget of the Kansas Department of Commerce (KDC) estimates and revisions, all three-year plans, and briefed the Committee on the breach occurring all deviations from the state IT architecture. The within that agency’s data system, affecting many Legislative CITO is directed to review the Kansas job-seekers.

Kansas Legislative Research Department 7-2 2017 Information Technology May 10 system, and testing for deployment of Windows 10. The Director for Technical Services for KLOIS The Committee continued discussion with also presented an overview of new services offered representatives of KDC, in executive session, within the Legislature, including audio streaming regarding the data breach. The Committee from committee rooms, new computers for staff returned to an executive session to hear an and legislators issued prior to the 2018 Session, overview of the Kansas Intelligence Fusion and a pilot program to explore the benefits of data Center. encryption.

September 8 The Executive CITO presented the most recent quarterly report, highlighting projects in “caution” A representative of the Legislative Division of and “alert” status. He also referenced projects Post Audit (LPA) presented the most recent IT recently approved. audits of the Office of the Attorney General, the Kansas Department of Education, and Larned The Executive Deputy Chief Information State Hospital. A portion of the LPA Security Officer (CISO) presented an overview of representative’s presentation was conducted in how cybersecurity funds allocated to the Office of executive session. LPA staff also presented an Information Technology Services (OITS) in the update on the KanDrive project undertaken by the 2017 Session will be used in the coming year: Kansas Department of Revenue as a function of tools and services such as data logging, central LPA’s IT project monitoring authority. LPA noted user analysis, agency-wide incident response, and the project was in “caution” status due to concerns denial-of-service protection. He also cited the need regarding the scope, schedule, and quality of the for a long-term fiscal solution to enable OITS to project. LPA also noted enhancements to the provide centralized authority in order to coordinate project have raised the cost of the project to $8.6 resources across agencies to improve state million from the original $6.4 million. cybersecurity.

The Judicial CITO presented a status update September 22 on projects within the Judicial Branch, including a centralized case management system for both The Committee again heard from the CIO of district courts and appellate courts, judicial tools KDHE for an update on KEES. He noted the software, and an upgrade of the Judicial Branch system went live statewide on August 28, 2017; website. The CITO explained the proposed case ongoing support and maintenance will regularly management system will increase efficiency, update the system and a new operations manager improve data quality and performance will work with the vendor (Accenture) to enhance measurements, and enable work-sharing among the system. The CIO then answered questions district courts. He further explained, due to the from members, including on three lessons learned proposed case management system upgrade, it is from managing the project: 1) dividing such a necessary to also upgrade the Judicial Branch large project into three phases enabled the team to website. maintain control of the project; 2) unwavering executive support kept the project stable; and 3) The Acting Legislative CITO told the maintaining a good relationship with the vendor Committee the LCC was in the process of while holding the vendor accountable for the recruiting and hiring a new Legislative CITO. The specific terms of the contract was a challenging Director of Application Services for the Kansas balancing act. Legislative Office of Information Services (KLOIS) presented on new and continuing The Deputy Attorney of KDC updated the projects within the Legislature, including a new Committee on the extensive data breach that Senate chamber voting system, improvements to occurred in March 2017. The Deputy Attorney the Kansas Legislative Information Systems and said KDC clients whose data had been Services Law Making system used by the Office compromised were notified via e-mail; clients of Revisor of Statutes, House and Senate chamber without valid email addresses were not notified by automation, improvements to the committee any other manner. The Committee then heard the

Kansas Legislative Research Department 7-3 2017 Information Technology remainder of KDC’s presentation in executive ● Request OITS include in its plans the session. expectation that, if agencies are given the option to take control of their own The Executive CISO responded to questions cybersecurity efforts, agencies be required presented by members at the September 8 meeting. to consent to a cybersecurity responsibility The CISO stated a number of obstacles must be statement, which would specify actions overcome in making state agencies secure from necessary to improve cybersecurity within cyberattacks; among them are a lack of centralized each agency and identify individuals authority, a dearth of cybersecurity professionals within each agency responsible for in state government, and a lack of funding for oversight of cybersecurity activities; cybsersecurity measures. The CISO recommended the Committee use 2017 SB 204, a cybersecurity Determine ways in which the Legislature bill then in the Senate Committee on Ways and ● may elevate the importance of the Means, as a template for legislation introduced in discussions surrounding cybersecurity the 2018 Session. within the State as the Legislature has the The Executive CITO presented a summary of responsibility to protect data provided to portfolio project management (PPM). He stated it the State by citizens in the course of doing is an approach that provides better project business with the State; execution and fewer project failures, and adds value through better outcomes. The CITO then ● Determine how agencies may implement made several recommendations to the Committee any changes necessary to improve based on the principles of PPM, including revising cybersecurity; the KITO project threshold of $250,000 to recognize both cost and risk and transforming ● Continue investigation into what needs to KITO into an Enterprise Project Management be accomplished to allow archiving of the Office. livestream of committee hearings held in the Old Supreme Court Room; The Secretary of Revenue provided an update on the KanLicense project. He noted earlier attempts to modernize the system were ● Enable OITS to provide oversight beyond unsuccessful so those projects were stopped and the initial stages of a project. (A member, the project managers took a new approach in noting previous consolidation initiatives December 2016. He noted the first approach and then return to distributed authority, would have cost $40 million, whereas the cautioned members not to be precipitous revamped project costs are estimated to be less regarding consolidation of authority); than $10 million. ● Encourage OITS to develop more tools that will provide better project portfolio ONCLUSIONS AND ECOMMENDATIONS C R management, such as automated reporting tools and software, and work toward better No legislation was recommended for collaboration and integration of systems to introduction. The Committee agreed on the avoid duplicative projects; and following recommendations:

● Request OITS present a clear roadmap for ● Schedule a meeting of the Joint the process of mandating actions to Committee on Information Technology improve cybersecurity for state agencies. early in the 2018 Session to consider OITS should ensure the roadmap treats all OITS’ proposed roadmap for IT security agencies fairly; and make recommendations for legislative action in the 2018 Session, including discussion on 2017 HB 2331 and 2017 SB 204.

Kansas Legislative Research Department 7-4 2017 Information Technology JOINT COMMITTEE

Report of the Joint Committee on Kansas Security to the 2018 Kansas Legislature

CHAIRPERSON: Representative Kevin Jones

VICE-CHAIRPERSON: Senator Steve Fitzgerald

OTHER MEMBERS: Senators John Doll, Dan Goddard, Pat Pettey, and Lynn Rogers; and Representatives Michael Houser, Jarrod Ousley, Louis Ruiz, and Eric Smith

CHARGE

KSA 46-3301 directs the Joint Committee to study, monitor, review, and make recommendations on matters related to the security of state officers or employees, State and other public buildings and other property and infrastructure in the state, and to consider measures for the improvement of security for the State. In addition, the Committee is authorized to address these additional topics:

● Emergency communications;

● Organization of private, civilian resources related to state emergency preparedness and security; and

● Resources and readiness of the Kansas National Guard.

December 2017 Joint Committee on Kansas Security

ANNUAL REPORT

Conclusions and Recommendations

The Committee recommends the Secretary of State, for all upcoming elections, protect the integrity of Kansas voting machines and protect against hacking, and assure the voters of Kansas that voting is tamper proof.

The Committee recommends the House Committee on Appropriations and the Senate Committee on Ways and Means consider the Kansas Bureau of Investigation enhancement presented to fund agent positions, particularly investigation positions. The Committee recognizes the need for the Legislature to study Kansas’ overall law enforcement capacity as compared with demands on law enforcement and as compared with capacity in other states.

The Committee recommends the House Committee on Appropriations and the Senate Committee on Ways and Means consider authorizing the Kansas Division of Emergency Management to fill a Planner II National Bio and Agro-defense Facility position for FY 2019.

The Committee recommends continuity and priority of the Kansas Department of Agriculture’s Emergency Exercise Plan for biosecurity and the Kansas Agriculture Emergency Response Corps through administrative changes, by placing those duties into statute. It suggests the Department of Agriculture recommend a bill.

The Committee commends Wolf Creek Nuclear Generating Station officials on their security measures and security planning.

Proposed Legislation: The Committee requests a bill to add a designated ranking minority member to the Committee.

BACKGROUND ● Matters relating to the security of a public body or agency, public building, or The 2004 Legislature created the Joint facility; Committee on Kansas Security (KSA 2017 Supp. 46-3301) to study, monitor, review, and make ● Matters relating to the security of the recommendations for the following: infrastructure of Kansas, including any information system; and ● Matters relating to the security of state officers and employees; ● Measures for the improvement of security for the state. ● Security of buildings and property under the ownership or control of the State; The Legislative Coordinating Council also directed the Committee to study emergency communications; organization of private, civilian resources regarding emergency preparedness; and

Kansas Legislative Research Department 8-1 2017 Joint Committee on Kansas Security the resources and readiness of the Kansas National The Captain noted access to the Capitol is Guard. restricted via key card access and screening processes. The Capitol Police oversee the key card process and monitor users. In the screening COMMITTEE ACTIVITIES process, he noted Capitol Police are operating x- ray inspection systems manufactured in 2010 and The Committee met in the Statehouse on May “metal detector” systems. He stated the systems’ 2 and October 3 and 5. The Committee toured warranties have expired, officers have reported the Wolf Creek Nuclear Generating Station (Wolf systems shut down unexpectedly, and both Creek) on October 3 and, on October 4, heard systems were exposed to dust and relocations presentations at Kansas State University (K-State) during renovations in the Capitol. He provided on the Biosecurity Research Institute (BRI), the estimates of costs prepared in 2016 for system National Bio and Agro-defense Facility (NBAF), replacement and warranties of approximately and the TRIGA Mark II nuclear reactor. On $168,080; adding inspection to the Capitol’s October 4, the Committee also heard a loading dock was estimated at $108,505. presentation at the offices of the Kansas Department of Agriculture (KDA) in Manhattan. The Captain provided a listing of 2,355 Capitol Police activities for January through Security of State Officers and Employees August 2017. Those activities included 1,428 car stops, 59 instances of citizen assistance and 209 of State office security review. On October 5, services rendered, 266 instances of investigating the Secretary of Administration reported the subjects, 23 medical calls, 9 suspicious packages, Governor had asked her to coordinate a review of and 18 threats. He urged lawmakers who receive facility security and training efforts at state offices, hateful or threatening statements to report those following the September 19, 2017, shooting of a incidents to both their local law enforcement Department of Revenue employee in Department agencies and to the KHP. of Revenue offices in Wichita. The Secretary reported she would be working primarily with the Public Safety Communications Kansas Highway Patrol (KHP), the Adjutant General, and the Office of Information Technology FirstNet. At its May meeting, the Committee Services to address physical security measures, reviewed Kansas’ options for participation in the technology needs, training opportunities, and FirstNet Public Safety Network. policy updates. She noted the State manages more than 400 leased buildings across Kansas and FirstNet, an independent authority within the security arrangements vary for those buildings. National Telecommunications and Information The Secretary offered to provide an update to the Administration, was created as part of the Middle Committee in January 2018. Class Tax Relief and Job Creation Act of 2012 and given the task to provide emergency responders Capitol Complex security. The Captain of with a nationwide high-speed, wireless broadband Troop K of the KHP, the Capitol Police, described network dedicated to public safety use. The the role of the Capitol Police in protecting state network could be used for voice messages, text employees and visitors in the Capitol and the messages, images, video, and location Capitol Complex. He also described the types of information, supplementing current land mobile officers assigned to the Capitol Police and their radio communications. Each state chooses whether roles. The 15 full-time uniformed officers include to opt in to the nationwide network or opt out and a 2-officer investigation team with specialized build its own network fully interoperable with the training who work closely with officers from nationwide network. Federal law specifies federal, state, and local law enforcement agencies; governors have no more than 90 days after a public resource/public information officer (a new receiving the FirstNet proposed state plan to position in 2017); and 3 officers assigned to the choose whether to opt in or opt out. bicycle patrol. He stated the bicycle patrol provides quick response times in the Capitol In April 2017, AT&T was selected as the Complex, particularly during special events. FirstNet nationwide provider. Each public safety

Kansas Legislative Research Department 8-2 2017 Joint Committee on Kansas Security agency will choose whether to use FirstNet. User general information about FirstNet and its fees are expected to pay for the system. implementation to the Committee on October 5. He stated a top priority will be deploying the A representative of the Legislative Division of network in places where coverage may be Post Audit (LPA) reviewed that office’s difficult. performance report, Office of Information Technology Services: Reviewing the State’s (Note: On August 15, 2017, the Governor Options Related to the FirstNet Public Safety announced Kansas would participate in the Network, released in April 2017. LPA concluded nationwide FirstNet network.) that, although the State could face some risks by opting in, it would have to overcome several Kansas Interoperability Communications significant challenges in order to successfully opt System (KSICS). At its meeting on October 5, the out. Those challenges would include financing Committee received testimony from the KDEM plus meeting deadlines for planning and Director regarding KSICS. KSICS is the daily implementation of this complex project. According means of communication for the Kansas to the report, FirstNet asserts states will not incur Department of Transportation (KDOT), KHP, and costs to build or maintain the network, but there 28 other state agencies using 6,237 radios. It are some concerns states could have costs in the provides daily or statewide interoperable use for future. 24,317 user radios associated with 1,084 non-state entities, an 800 MHz radio frequency band, and 76 The Chairperson of the Kansas 911 antenna sites (towers) across the state. He stated Coordinating Council (Council Chairperson) KSICS is expected to continue for at least another provided information on a letter written by the ten years, as land mobile radios remain important Council recommending to the Governor that he to emergency communications. The spectrum is opt in to the nationwide network. The Council restricted by the Federal Communications Chairperson noted 57 dispatch centers already Commission to public safety use. were using AT&T NextGeneration 911 systems selected by the 911 Coordinating Council and 30 (Note: The Kansas Statewide Efficiency more expected to be online in 2018. He stated his Review report by Alvarez and Marsal, issued in belief subscriber costs to use the FirstNet network January 2016, recommended KDOT evaluate will be at or below rates paid by first responders selling or leasing the state radio system operation for their current communication services. to commercial users. KDOT contracted with MissionCriticalPartners to further study the issue. The Director of Intelligence and In a report to KDOT dated July 6, 2017, the Communications, Adjutant General’s Department, contractor reported it found limited opportunities testified the State conducted outreach and research for private sector involvement in certain aspects of to determine State and first responder KSICS operations and maintenance but increased requirements for the network and provided that costs to end-users would result from adoption of information to FirstNet. He provided a document most options.) developed by a team including state and local officials and representatives of first responder Civilian Resources for Emergency organizations to use to evaluate the AT&T Preparedness proposal for Kansas prior to the Governor’s decision to opt in or opt out. The Chief The KDEM Director, on October 5, also Information Technology Officer of the Executive updated the Committee on KDEM’s roles in Branch also provided information on the emergency preparedness and response. He stated upcoming evaluation of the AT&T proposal for the emergency management is the organized analysis, State. planning, decision making, and assignment of available resources to mitigate, prepare for, The Kansas Division of Emergency respond to, and recover from the effects of all Management (KDEM) Response and Recovery hazards. In Kansas, the top ten hazards in order of Branch Director (KDEM Director), also provided probability are flood, tornado, windstorm, winter

Kansas Legislative Research Department 8-3 2017 Joint Committee on Kansas Security storm, wildfire, agricultural infestation, hailstorm, instances, such as emergency loans through the hazardous materials release, utility or U.S. Department of Agriculture, small business infrastructure failure, and drought. Examples of loans, and housing assistance. mitigation, defined as “activities aimed at or eliminating or reducing the long-term risk of Civilian involvement in intelligence sharing. property damage and loss of life from hazards and The Adjutant General, testifying October 5, noted their effects,” include zoning and building codes, the Kansas Intelligence Fusion Center (KIFC) floodplain buyouts, safe rooms, and radio analyzes systems-level threats to Kansas critical repeaters. Preparedness involves planning, infrastructure and works with private industry to training, and exercises to test that training. improve cybersecurity. Analysts from private industry participate. He also noted partnerships The KDEM Director reviewed responsibilities with K-State and the University of Kansas on bio- by level of government. He stated specific threats. emergency actions and responsibilities are within each county’s emergency operations plan, which Resources and Readiness of the Kansas describes how the government will respond to National Guard critical tasks in an emergency—by whom (and lines of succession), by what authority, and using The Adjutant General appeared before the what resources. Major functions of local Committee on October 5 to provide an overview government in emergencies include direction and of the readiness and staffing of the Kansas control, communications, emergency public National Guard. He thanked the Legislature and information, evacuation, mass care, and resource other Kansans for their support and expressed his management. A county declaration of emergency pride in the efforts of National Guard members, is the first step in accessing other resources, e.g., civilians in KDEM and Kansas Homeland by activating mutual aid agreements, and in Security, and their families. He noted providing access to state assistance. He described approximately 1,000 soldiers and airmen had local Citizen Corps Councils and urged deployed around the world in the previous year, involvement in them. and 1,200 were preparing to deploy in the next year. State government responsibilities were described by the KDEM Director as developing The Adjutant General described ways in which and maintaining a statewide comprehensive the Adjutant General’s Department works to emergency management program; supplementing reduce inefficiencies and mitigate effects of any and facilitating local efforts before, during, and reductions in resources. He stated this includes after emergencies; providing guidance and seeking out partnerships that better control state assistance to localities through program funding requirements. Efforts to identify development; and coordinating and integrating opportunities to reduce costs by consolidating resources to local needs. He noted some of the missions and maintenance include relocating resources coordinated through state efforts are Kansas National Guard Headquarters, the KIFC, private, and personnel of the State also coordinate and KDEM to Forbes Field, which also would with private organizations, such as church better establish Forbes Field as a joint activity and denomination assistance groups. State assistance is lessen the likelihood it would be closed by a Base available when capabilities do not exist within the Realignment and Closure commission. He noted affected county or region, the county has state moneys leverage matching federal dollars. exhausted mutual aid and contractor support, and He also pointed to energy-use reduction efforts. the county has declared an emergency. The Adjutant General identified his top three If damages exceed per capita thresholds set challenges to the State and nation: the federal debt annually, a federal disaster may be declared, and other federal obligations will leave fewer making assistance available to the State and to resources available for defense; non-state actors local and tribal governments for public facilities or have joined Russia, China, Iran, and North Korea infrastructure, the KDEM Director stated. as conventional and cyber threats; and few young Individual assistance is also available in some

Kansas Legislative Research Department 8-4 2017 Joint Committee on Kansas Security individuals are able and willing to serve in the 30 percent in FY 2017, and overtime expenditures armed forces. He suggested benefits for Guard increased 733 percent from FY 2012 through FY members, such as tuition assistance, compete with 2016 to $300,351 in FY 2016. The percentage of benefits available to Guard members in nearby cases substantially completed within 90 days states. decreased from approximately 55 percent to approximately 33 percent from FY 2013 to the end Kansas Bureau of Investigation Resources of FY 2017.

On October 3, the Director of the Kansas The Executive Officer also provided Bureau of Investigation (KBI) stated the agency information on numbers of officers assigned to lacks resources to meet the expectations of major violent crime investigations and proactive citizens, law enforcement partners, and narcotic enforcement: Kansas, 65 total; Oklahoma, prosecutors. The KBI Executive Officer provided 166 total; Nebraska, 90 total; Missouri, 103 total; more detailed information. Iowa, 78 total; and Arkansas, 88 total. (Colorado did not provide the requested information.) The Executive Officer stated numbers of violent crimes (murder, rape, robbery, and The Assistant Director of the KBI provided aggravated assault and battery) are above the ten- information on investigation of cybercrimes. He year average and numbers have increased in the stated, of the approximately 280,000 complaints past two years. The numbers of burglary and theft the Federal Bureau of Investigation (FBI) receives crimes have declined, but motor vehicle thefts each year, Kansas ranks 31st in the number of have increased. These increases have resulted in subjects, 32nd in the number of victims, and 33rd in increased demand for KBI investigative services, financial loss; 1,963 Kansas victims reported the Executive Officer said, and she noted 70 Internet crime to the FBI in 2016. He discussed percent of Kansas law enforcement agencies have best practices for combating cybercrime, including ten or fewer commissioned officers. establishing strong governance, defining who should be involved, developing collaborative The Executive Officer reviewed examples of public and private relationships, and generating crimes the KBI has not been able to investigate. interlocking response strategies; Michigan was The KBI has only six specially trained agents to offered as an example of a state following many investigate Jessica’s Law crimes against children; best practices. He stated the KBI’s vision for 100 physical child abuse or endangerment offenses investigating cybercrime would include digital were reported by jurisdictions with no forensics, cyber investigation, investigation of investigators and the KBI did not work those child pornography and online exploitation of cases. The KBI stopped accepting white collar and children, intelligence gathering, and technical other financial crimes in 2012 unless the case support, with each of those “lanes” requiring involves a public official; the agency investigates specific skill sets and training. 50-60 cases a year involving governmental integrity. However, data show Kansans lost at least The October 3 meeting was closed for 15 $7 million from Internet-based financial crimes minutes pursuant to KSA 2016 Supp. 75-4319(a), and more than $86 million in reported theft losses as amended by Section 4 of Chapter 73 of the in 2016. She noted methamphetamine remains the 2017 Session Laws, to allow KBI officials and greatest drug threat in the region, but heroin Committee members to further discuss cybercrime imports increased sevenfold since 2008 and border investigations. (Note: Staff were not present.) seizures of fentanyl increased 83 percent. Human trafficking also remains a major area of concern. Biosecurity

A graphic the Executive Officer reviewed Biosecurity Research Institute. The showed a general decline in the number of funded Committee and staff members received a briefing agent positions, from 99 in FY 2010 to 74 in FY at K-State from the Director of the BRI. It focuses 2017 and FY 2018. Separate graphics showed on infectious diseases that threaten livestock and investigative declinations increased from humans, pathogens that threaten food crops, food approximately 18 percent in FY 2014 to more than processing methods to ensure food safety, the

Kansas Legislative Research Department 8-5 2017 Joint Committee on Kansas Security biology of pathogens and diseases, and arthropod- racing facility in Finney County and the actions borne diseases. The BRI Director noted the BRI taken to identify horses with the disease and has 14 research laboratories with support spaces prevent further infection. All horses that tested that meet biosafety level 3 (BSL-3) requirements, positive for the disease had to be euthanized, with where scientists can study very serious threats to the only other option being lifelong quarantine. the nation’s food supply and infectious diseases. The BRI also contains facilities for biosafety and The KDA Emergency Management biocontainment training, molecular virology and Coordinator and the Program Manager for the immunological studies, arthropod containment, Kansas Agriculture Emergency Response Corps and plant and cell culture. The BRI Director (KAERC) provided information on a stop- described, in general terms, the multiple movement response to an animal disease outbreak infrastructure and safety procedures in place to and exercises to test those response plans. They prevent releases of pathogens. explained that, during a large-scale incident, the KAERC will use the wide range of skills of National Bio and Agro-defense Facility. At volunteers in local communities in roles not filled the BRI, the Committee and staff received a by state and federal staff. KAERC volunteers will briefing on the NBAF under construction next to complete several training courses. the K-State campus. The $1.25 billion, 580,000- square-foot facility will provide integrated The Secretary stated the KDA would need research, response, and diagnostic capabilities to veterinarians, communications personnel, protect animal and public health. The NBAF volunteer coordinators, and other trained persons Project Manager stated the facility will include a to deal with any outbreak. She asked the completely isolated BSL-4 (the highest safety legislators to consider giving the KDA statutory level) laboratory; currently, six are in operation in responsibility for outbreak planning and exercises the nation, he said. He described in general terms and for a trained volunteer corps. design considerations and systems to prevent the release of any hazardous materials, including Nuclear Facilities special air handling and special treatment of waste, and stated the three parts to security are physical, Wolf Creek. The Committee and staff traveled operational, and electronic. to Wolf Creek, near Burlington, on October 3 for an overview of the facility and a tour of a portion Kansas Department of Agriculture. After of the facility. Emergency preparedness and introductory remarks from the Secretary of general security were among the issues addressed Agriculture, the Committee and staff received by Wolf Creek officials. information from KDA staff regarding responses to plant and animal diseases. K-State. Committee members and staff received a briefing at the TRIGA Mark II Nuclear The KDA Chief Counsel explained the Reactor Facility at K-State from its manager. The statutory authority of the Secretary of Agriculture reactor is licensed to operate at up to 1.25 to respond to outbreaks of plant pests and animal megawatts and went critical in 1962. The manager diseases, for example, to eradicate plant pests and described its research capabilities and, in general to quarantine animals with certain contagious or terms, safety for the facility. infectious diseases. If a quarantine is issued, KDA officials may enter private property; enforce directions, rules, and regulations to prevent spread CONCLUSIONS AND RECOMMENDATIONS of the disease; prevent animal shipments; and take other steps. The Committee recommends the Secretary of State, for all upcoming elections, protect the The Animal Health Commissioner described integrity of Kansas voting machines and protect the process of a disease investigation. He against hacking, and assure the voters of Kansas described a recent outbreak of equine infectious that voting is tamper proof. anemia in horses linked to an informal horse

Kansas Legislative Research Department 8-6 2017 Joint Committee on Kansas Security The Committee recommends the House into statute. It suggests the KDA recommend a Committee on Appropriations and the Senate bill. Committee on Ways and Means consider the KBI enhancement presented to fund agent positions, The Committee requests a bill for introduction particularly investigation positions. The to add a ranking minority member for each interim Committee recognizes the need for the Legislature committee. (After consultation with staff of the to study Kansas’ overall law enforcement capacity Revisor of Statutes, it was determined the as compared with demands on law enforcement Committee bill would propose an amendment to and as compared with capacity in other states. KSA 2017 Supp. 46-3301 to add designation of a ranking minority member for the Joint Committee The Committee recommends the House on Kansas Security. It was noted KSA 2017 Supp. Committee on Appropriations and the Senate 46-3301(f) authorizes the Committee to introduce Committee on Ways and Means consider only legislation deemed necessary in performing authorizing KDEM to fill a Planner II NBAF the Committee’s functions. A separate bill will be position for FY 2019. drafted to designate a ranking minority member for each interim committee, to be introduced by an The Committee recommends continuity and individual legislator or a standing committee.) priority of the KDA’s Emergency Exercise Plan for biosecurity and the KAERC through The Committee commends Wolf Creek administration changes, by placing those duties officials on their security measures and security planning.

Kansas Legislative Research Department 8-7 2017 Joint Committee on Kansas Security JOINT COMMITTEE

Report of the Legislative Budget Committee to the 2018 Kansas Legislature

CHAIRPERSON: Representative Troy Waymaster

VICE-CHAIRPERSON: Senator Carolyn McGinn

RANKING MINORITY MEMBER: Representative Kathy Wolfe Moore

OTHER MEMBERS: Senators Rick Billinger and Laura Kelly; and Representatives Erin Davis, Steven Johnson, Bill Sutton (substitute), and Jim Ward (substitute)

CHARGE The Committee is statutorily directed to compile fiscal information, study and make recommendations on the state budget, revenues, and expenditures; and the organization and functions of the State, its departments, subdivisions, and agencies with a view of reducing the cost of state government and increasing efficiency and economy. In addition to the statutory duties, the Committee is to review the following:

● Changes to the approved budget for state agencies that will be submitted in the 2017 Interim, including the new Performance-Based Budgeting System; ● State General Fund receipts and the impact of statutory changes to be implemented in July; ● The implementation of the new school finance formula; ● The financial, possibly procedural, changes and Centers for Medicare and Medicaid Services licensing for the Osawatomie State Hospital and Larned State Hospital, along with the use of other facilities on the Larned State Hospital campus; and ● Other topics, including the new state employee health clinic; Kansas Public Employees Retirement System unfunded actuarial liability; the use of bonds in the Kansas Department of Transportation; the need for, funding of, and source for cybersecurity; changes to the Lansing Correctional Facility; and funding and the impact of the recent wildfires in Kansas.

January 2018 Legislative Budget Committee

ANNUAL REPORT

Conclusions and Recommendations

Following its review and discussion, the Committee made no recommendations.

Proposed Legislation: None

BACKGROUND System (KPERS) Briefing Valuation Report, an Office of Information Technology Services (OITS) The Legislative Budget Committee is update on IT modernization, a briefing on the statutorily directed in KSA 46-1208 to compile Comprehensive Response to School Finance fiscal information. It is also directed to study and Decision meeting, the status of the new state make recommendations on the state budget, employee health clinic, and selected agency issue revenues, expenditures, and on the organization briefings. and functions of the State, its departments, subdivisions, and agencies with a view of reducing Specific information about each topic follows. the cost of state government and increasing efficiency and economy. Temporary Assistance for Needy Families Funded Home Visitation Program

COMMITTEE ACTIVITIES Kansas Legislative Research Department (KLRD) staff provided an overview of the TANF The Committee met four times during the Funded Home Visitation Program and included a interim. On August 8, 2017, the Committee review of background information regarding the reviewed the Temporary Assistance for Needy Legislature’s funding for program expansion and Families (TANF) Funded Home Visitation the intended recipient of the program funds. The Program, recertification status of Osawatomie Committee had concerns regarding the manner in State Hospital (OSH), an update on the status of which the agency planned to distribute the funds. the request for proposal (RFP) regarding OSH, review for the 2017 pay plan implementation, and Kansas Department for Children and Families an update on correctional facilities. The (DCF) staff provided an update on the RFP on the Committee met on October 5, 2017, for updates on Home Visitation Program. The Committee State Fire Marshal Disaster activities, Kansas members noted the clear legislative intent in the Department of Transportation (KDOT) bonding, documents provided. DCF staff indicated the OSH recertification, KanCare 2.0, Lansing agency would issue the funds to the Kansas Correctional Facility replacement, the new school Children’s Service League to comply with finance formula, and selected Kansas Efficiency legislative intent. Study recommendations and agency responses. The Committee met on November 11, 2017, to Osawatomie State Hospital Update review the consensus revenue estimates and receive an overview of agency budget requests. The Secretary for Aging and Disability Finally, the Committee met on December 20, Services provided an update on RFPs to construct 2017, to review Regents universities’ efficiency a 100-bed psychiatric care facility at OSH and get studies, Kansas Public Employees Retirement an engineering study of vacant buildings.

Kansas Legislative Research Department 9-1 2017 Legislative Budget Timelines for the 100-bed psychiatric facility and ● Current classified regular and unclassified the engineering study of vacant buildings were benefits-eligible employees who first provided. became employed by the State of Kansas after July 1, 2012, are proposed to receive An agency representative noted that an a 2.5 percent increase. abbreviated acute care hospital survey was concluded on August 15, 2017. The Centers for Medicare and Medicaid Services (CMS) There were five key issues that needed to be determined OSH is in compliance. The reasonable determined: assurance period began August 15, 2017, and Benefit eligibility only; extends for 90 days; if, after that time, the hospital ● is determined to be in compliance with all Medicare conditions of participation, the hospital ● What was meant by “increase in salary”; will be certified for participation in the Medicaid and Medicare programs. ● What was meant by “continuously employed with no break in service”; OSH has been approved for recertification, effective December 15, 2017. Additional paper ● What date the employee first became work will be completed prior to notification of employed with the State; and payment for claims. Working in conjunction with the Kansas Department of Health and Environment (KDHE), one-time disproportionate ● The cutoff date, July 2, 2017, which share hospital (DSH) retroactive payments will be became the effective date. made in the amount of $7.5 million for OSH and $2.3 million for Larned State Hospital (LSH). Recent surveys that were conducted at OSH and This was determined for all Legislative and LSH were highlighted. Most concerns have Executive Branch agencies, except for already been addressed or have been improved. universities, which have their own pay systems. Committee members received an updated copy of On July 17, 2017, an e-mail was sent out to all the ligature points of concern with timelines. non-Regents employees stating that an employee Issues with abuse and neglect are being addressed who did not receive an increase could appeal by either by termination of employment, additional sending a return e-mail to the Office of Personnel training, or retraining efforts. Services. To date, there have been 950 appeals, and the Office has responded to all of the appeals. A few pay rates have changed, but most of the Update on Pay Plan Implementation appeals submitted were due to the employee not understanding the language in the bill. A representative from the Kansas Department of Administration provided an update on the pay plan implementation and basis and stated the A Committee member suggested a review of update is limited to the Legislative and Executive methods to make the pay raise more equitable for Branches. The Judicial Branch received an across- all employees. the-board 2.5 percent increase. The increase was based on: Representatives from selected agencies also commented on the pay plan implementation. ● Current classified regular and unclassified benefits-eligible employees who have Lansing Correctional Facility been continuously employed by any state agency since July 1, 2012, but have not Overview received any increases to their regular base rate of pay since that date, are Department of Corrections (DOC) proposed to receive a 5.0 percent increase; representatives provided information on the RFP and for the Lansing Correctional Facility replacement, which includes options to either use contractor

Kansas Legislative Research Department 9-2 2017 Legislative Budget financing (lease-purchase) or state financing maintenance increases the risk that necessary (bonding) the construction. DOC staff outlined the maintenance will be deferred. timeline associated with the process and the approvals needed to move forward. Agency representatives presented an update on the Lansing Correctional Facility. Negotiations are Performance Audit Comparing the Merits of under way from two proposals related to the Lease and Bond Options for Replacing Lansing Correctional Facility reconstruction project. Meetings were scheduled for project Staff from the Legislative Division of Post approval early November 2017. One proposal is Audit (LPA) provided an overview on the DOC from the GEO Group, located in Florida, and performance audit “Comparing the Merits of another from CoreCivic, which is located in Lease and Bond Options for Replacing the Tennessee; both specialize in building and Lansing Correctional Facility.” LPA staff noted managing prisons. The proposals are for privately that regardless of which option is chosen, the State run facilities with lease or purchase agreements. will continue to operate the Facility and further Maximum security facilities currently double bunk highlighted that: inmates, unless there are segregation or mental illness considerations. The RFP included 1,920 ● With bond financing, the State beds, 64 segregation beds, 64 beds for mentally ill would issue bonds to pay for inmates, and 15 general population pods either construction of the new facility maximum or medium security, which will be and would own it from the designed the same. The medium security facility beginning; and will be razed before new construction, and the maximum security facility will be placed on hold ● With lease-purchase financing, a pending further consideration. The completion of private firm would build and own the new facility would take approximately 24 to 36 the new facility, then lease it to months. Discussion continued regarding staffing the State for a period of time issues, increased caseloads, and turnover rates. before eventually selling it to the State. Lansing Building Proposal

The analysis found bond financing with A representative from the DOC presented an contracted maintenance likely would be the most overview of the Lansing Building Proposal and cost-effective option, with an estimated net present noted that the medium facility has several cost of $176.0 million over 20 years. Bond structures on site that would be demolished and financing with state maintenance had an estimated would utilize some of the infrastructure for the net present cost of $193.0 million over 20 years. A new facility. The new facility would address issues 20-year lease-purchase agreement with either a that the DOC currently faces in regard to staffing, final purchase payment or the purchase price built mental health, and the medical field. As approved into the lease payments had an estimated net by the Legislature, a RFP for bonding authority present cost of $206.0 million over 20 years. The and lease-purchase was developed. Approval from State’s two options for rebuilding the Lansing the State Building Advisory Commission to pursue Correctional Facility create some additional risks a lease-purchase option was received. The new and benefits for the State. If the DOC chooses a facility would provide improved working lease-purchase option, there are some additional conditions for staff and living conditions for the contract risks that will require hiring legal counsel inmates. The new facility would be State-operated, with skills specific to lease financing for large- accomplished within existing resources, meet scale construction projects. A lease-purchase Americans with Disabilities Act requirements, contract lowers the State’s risks related to have additional space for recidivism reducing construction costs, property damage, and ongoing programs, and will accommodate future expansion repairs. Regardless of whether lease or bond if needed. A review of staffing efficiencies financing is used, relying on contracted followed with a projected savings of $17.0 million. Liability issues with the lease agreement were reviewed. CoreCivic would be responsible

Kansas Legislative Research Department 9-3 2017 Legislative Budget for repairs due to storm damage, cost overruns percent at Lansing Correctional Facility. Starting during construction, and replacement or repairs of salaries versus turnover rates comparisons show items within the facility. Contracts would be Kansas rates fifth of the surrounding six states. managed by the DOC. The lease-purchase The Correctional Officer I retention rate is 52.97 agreement would be a $23.0 million savings, and percent, or 518 of the 978 employees, for 0 to 2 no capital improvement expenditures are expected years of employment. for 5 years after the 20-year lease. State Fire Marshal Disaster Assistance Representatives from CoreCivic and JE Dunn Activities Update Construction provided an overview of the company and discussed the proposal for the A representative from the Office of the State Lansing Correctional Facility Reconstruction. A Fire Marshal provided an overview of the Kansas review of the states benefiting from the CoreCivic- Search and Rescue Program and reviewed disaster leased prisons and full-risk maintenance services assistance activities in response to Hurricane in California and Oklahoma followed. The Harvey. In response to the Emergency estimated schedule is a 24-month completion Management Assistance Compact (EMAC) timeframe that includes competitive private request from Texas, the Kansas Search and Rescue financing rates without impacting bonding Program sent 42 first responders to Texas. Support capacity through JP Morgan. The project transfers services were provided in the communities of preventative and catastrophic maintenance for the Houston and Katy. life of the lease and defers the capital outlay until the facility is ready for use. Kansas Department of Transportation Bonding Review In response to questions from Committee members, staff from CoreCivic noted property A representative from KDOT presented an ownership, cost-effectiveness based on past update on the bonded indebtedness and use of experience, and cost of capital and private place current bonding authority and stated $200.0 market were primary factors to providing lower million of the approved $400.0 million has been bids. Similarly designed facilities were reviewed, bonded to date. Staff reviewed the Comprehensive and staffing numbers and costs are in line with the Highway Plan bonding authority of $890.0 Lansing Correctional Facility. million, the Comprehensive Transportation Program bonding authority of $1.27 billion, and A representative from the Kansas Organization the T-WORKS Program bonding authority of of State Employees presented testimony in $1.37 billion. A review of the T-WORKS bonding opposition of the Lansing building proposal. history from FY 2011 through FY 2019 followed. Concerns were expressed regarding the cost of the The outstanding debt of approximately $2.0 billion Lansing Correctional Facility renovation, the lack will be completely paid in FY 2038, extended due of government transparency, and pre-determined to the bonds recently issued for 20 years, and the project bidder and performance issues with Comprehensive Transportation Plan’s outstanding CoreCivic, primarily in the areas of understaffing debt is scheduled for payout in 2024. A review of and overcrowding, which were identified in a the amortization schedule on the debt service on recent audit. outstanding bonds followed. KDOT’s Standard and Poor’s bonding rating is AAA, and the rating El Dorado Staffing and Inmate Issues of the Kansas Turnpike Authority was recently upgraded to a AA-2, which is the highest rating for DOC agency representatives provided an a turnpike authority. update on correctional facility staffing and inmate issues. Graphs reflected the DOC-uniformed staff Approximately $320.0 million in lettings, for turnover rate of 33.14 percent. El Dorado maintenance and preservation, is anticipated in FY Correctional Facility (EDCF) and Lansing 2018. Special designated funds, federal funds, Correctional Facility have the highest turnover motor fuel taxes, and other fees totaling $923.0 rates. DOC uniformed staff turnover at Lansing million fund the highway system. KDOT staff Correctional Facility is 37.47 percent and is 46.11 noted 23 projects have been delayed; bonding

Kansas Legislative Research Department 9-4 2017 Legislative Budget payments remained level over the past few years; Medicaid Enterprise is on schedule to complete all $325.0 million in outstanding Build America requirements by December 2017. bonds are interest-only payments; and the Lewis and Clark Viaduct project could cost $60.0 million School Finance in FY 2018. On the $400.0 million in bonds issued in FY 2018, it is anticipated the bonding rate New School Finance Formula Overview would be between 3.0 percent and 5.0 percent, with a premium estimate of $40.0 million. An overview of the new school finance formula reflected in SB 19, which was enacted KanCare 2.0 during the 2017 Legislative Session, was provided by KLRD staff. The new Kansas School Equity Overview and Enhancement Act provides aid to school districts based on specific calculations and allows A KanCare 2.0 overview was presented and districts to adopt a local option budget (LOB). the managed care organization (MCO) process KLRD staff stated the Kansas School Equity and was reviewed. The Division of Health Care Enhancement Act includes weighting, enrollment, Finance (KDHE) expects six or seven responses to LOB cap and equalization, inflation adjustments, the RFP. The responses would be reviewed and accreditation and reporting, and nomenclature evaluated during the first three months in 2018 changes. State Aid to K-12 education for FY 2016 with contracts awarded in June 2018. The (actual) through FY 2019 (approved) was implementation of KanCare 2.0 is scheduled to reviewed. KLRD staff noted the FY 2018 to FY begin on January 1, 2019. A review of the provider 2019 change reflects a KPERS delayed payment. prospective, membership communication, and the stakeholders’ engagement meeting followed. A representative from the Kansas State Department of Education (KSDE) presented an Update overview of the effect of SB 19 on school district expenditures for the 2017–2018 school year. The A representative from KDHE provided an total impact of the bill on the unified school update on KanCare and the 2018 Schedule for districts is estimated to be approximately $215.3 KDHE Meetings and Associations and Advocacy million. Groups. The waiver application timeline opened on October 27, 2017, and public hearings were Staff of the Office of Revisor of Statutes held throughout November 2017. There were 256 provided an overview of the Kansas Supreme pages of comments submitted, and they are Court’s fifth opinion in Gannon v. State. The available for review on KDHE’s website. The Supreme Court ruling, issued October 2, 2017, application process and negotiation of special states SB 19 fails to satisfy both adequacy and terms and conditions with CMS will take place equity components of Article 6 of the Kansas over the next 9-to-12-month timeframe, as well as Constitution. The State has until June 30, 2018, to continued work with stakeholders and legislative correct the constitutional compliance issues, and representatives. A representative from KDHE the Court set a briefing schedule to begin on April provided a review of KanCare utilization, cost 30, 2018. comparison, and new services that are at no cost to the State. Kansas Medicaid has developed Briefing on the Comprehensive Response to contingency plans regarding the Children’s Health School Finance Decision Meeting Insurance Program (CHIP) and reauthorization determination, which includes the following: a KLRD staff presented an overview on the new eligibility category; system changes comprehensive response to the School Finance supporting new eligibility determination; a Decision meeting. A special committee was notification plan for CHIP participants; and a formed in response to the Gannon litigation, transition plan from CHIP to Medicaid. If CHIP is Gannon V, to act as fact-finders to gather not reauthorized, the impact to the State General information, compile options, and identify specific Fund (SGF) would be $37.7 million in FY 2018 matters for both chambers. Meetings included a and $53.3 million for FY 2019. The Kansas review of the history of the school finance

Kansas Legislative Research Department 9-5 2017 Legislative Budget litigation, history of Gannon, SB 19, the Kansas The estimate for total taxes increased by School Equity and Enhancement Act, and the $224.7 million and other revenues increased by Gannon V opinion, information on the education $4.9 million for the two years combined. The FY consensus calculation for FY 2018 and FY 2019, 2018 estimate increased by $108.3 million and the and a five-year SGF profile provided by KLRD revised estimate for FY 2019 increased by $121.2 staff. KLRD staff provided scenarios on revenue million above the previous estimate. A review of and budget adjustments of 18.0 percent across-the- the revised estimates, which reflects actual board reductions, or $600 million, that could be receipts from FY 2017 and changes within the FY required for additional K-12 funding. A review of 2018 and FY 2019 estimates, followed. The various state agencies and the impact of an 18.0 Kansas personal income growth has been reduced percent budget reduction followed. During the to 1.5 percent for FY 2017 and 3.1 percent final Committee meeting, the members looked at projected growth for FY 2018. KLRD staff reducing or eliminating the conflict over school reviewed the impact on the economy and the SGF finance and the recurrent possibility of school with the declining value of crop production, oil, closures, and had a review of information from the and gas prices. Kansas employment has remained Office of Revisor of Statutes as related to stagnant, hourly earnings increased by 0.02 constitutional provisions governing K-12 school percent, and an increase in corporate and sales tax finance. receipts is projected.

Review of Kansas Efficiency Study Human Services Caseloads

The Committee was given a review of selected KLRD staff explained the human services agency recommendations and agency responses to caseload impacts detailed in the Fall 2017 Human the “Kansas Statewide Efficiency Review” from Services Consensus Caseload Estimates for FY Alvarez & Marsal (A&M), which included the 2018 and FY 2019. KSDE and school districts, the Medicaid program in KDHE, the Department of Commerce, the The FY 2018 estimate is an all funds decrease DOC, DCF, the Department of Administration, the of $4.6 million and an SGF increase of $16.4 Department of Labor, the Department of Revenue, million from the approved FY 2017 budget. The the Adjutant General, and KDOT. estimate for the TANF program reflects a decrease of $286,800 in FY 2018 and $105,035 for FY 2019 Actual implementation and realistic savings from all funding sources as a result of declining from the A&M “Kansas Statewide Efficiency numbers of individuals receiving cash assistance. Review” will be provided to the Committee for The Foster Care program reflects an increase in all review at the beginning of the 2018 Legislative funding sources of $4.7 million in FY 2018 and Session. Discussion followed by Committee $4.6 million for FY 2019, as the number of members regarding the process going forward as children served and the cost for those services related to school funding and feasible funding increase. The Kansas Department for Aging and options. Disability Services (KDADS) KanCare estimate reflects an all funds decrease of $902,431 in FY State Budget, Revenues, and Expenditures 2018 and a decrease of $25.0 million for FY 2019, attributable to an SGF expenditure correction with Consensus Revenue Estimates for FY 2018 changes to Federal Medical Assistance and FY 2019 Percentages (FMAP), the rate at which federal funds are distributed, and other adjusted KLRD staff presented an overview of the expenditures. KanCare Medical is an all funds Consensus Estimating Group short memorandum decrease of $17.9 million in FY 2018 and an all regarding the SGF Revenue Estimate for FY 2018 funds increase of $231.3 million for FY 2019, and FY 2019. attributable to increased federal rates, which resulted in an adjusted SGF savings of $23.0 The impact of the new income tax laws and million. KDADS non-KanCare is an increase of legislative adjustments contained in the Omnibus $8.9 million in FY 2018 and $23.2 million for FY Bill were reviewed.

Kansas Legislative Research Department 9-6 2017 Legislative Budget 2019 above the 2017 approved amount and is A review of the school employer contributions attributable to increased projected expenditures. for KPERS followed. The increased employer contribution to KPERS was a result of increased Expanded Lottery Act Revenue Fund teacher salaries. KLRD staff noted there is $1.07 billion in LOB in FY 2017 and approximately KLRD staff presented an overview of the $1.00 billion in FY 2018, with the State’s share an Expanded Lottery Act Revenue Fund (ELARF) for increased cost. FY 2018 through FY 2019. The State receives 27.0 percent of the four State-owned casinos gaming State General Fund Profile revenue, including 22.0 percent to the ELARF, 2.0 percent to the Problem Gambling and Addictions KLRD staff provided an overview of the SGF Grant Fund, and 3.0 percent to cities and counties Profile for FY 2018 through FY 2019. The FY that house casinos. KLRD staff reviewed the 2017 receipts were approximately $72.0 million legislative-approved transfers and expenditure and more than projected, income tax projections were estimated revenue for FY 2018, which reflects a approximately $1.0 million less than projected, negative ending balance of approximately corporate income tax was $52.0 million more than $40,000, and noted 2017 Senate Sub. for HB 2002 projected, retail sales were up by $14.0 million, authorized the transfer of unencumbered funds and compensating use was up approximately $5.0 balances from ELARF to the SGF for FY 2018 million. The FY 2018 beginning balance is $108.5 and FY 2019. million and payments on the Pooled Money Investment Board loan will begin for FY 2019. Discussion followed by Committee members Expenditures included approved expenditures, regarding gaming revenues and competition with school finance funding, KPERS–School, casinos in bordering states. Staff noted the caseloads, and a reappropriation of $30.1 million southeast gaming facility’s projected revenue was for a total $6.6 billion in FY 2018 and $6.7 billion $40.2 million in FY 2017 and $29.9 million in FY for FY 2019. The actual ending balance after 2018. The Northeast, South Central, and adjusted expenditures is $108.5 million for FY Southwest Gaming Zones have reached a plateau 2017, $279.7 million approved in FY 2018, and since FY 2016. $354.9 million approved for FY 2019. The 7.5 percent statutory ending balance for FY 2019 is $503.0 million, which reflects a budget shortfall of Education Estimates $150.0 million, and over $300.0 million in additional revenue has been included over a three- KLRD staff presented an overview on the Fall year period. The State is in a much better position 2017 estimates for FY 2018 and FY 2019 for the than in previous years with a $300.0 million Education Consensus Calculations. SGF ending balance, but KLRD staff cautioned expenditures is estimated to be a decrease of $1.7 members that the receipts above expenditures are million in FY 2018 and an estimated increase of declining and they anticipate the trend to continue $46.0 million for FY 2019, in order to meet in to FY 2020 and FY 2021. statutory requirements. The new facilities’ weighting and the upward revised 20 mill of approximately $7.5 million resulted in a net of all Overview—Agency Budget Requests changes for the State Foundation Aid at a cost of $10.3 million in FY 2018 and $22.6 million for FY Statewide Overview 2019. The LOB decreased by $26.4 million in FY The Committee received a copy of the “FY 2018 and $8.1 million for FY 2019, which was 2018 to FY 2019 Preliminary Agency Budget based on the prior year. Capital Improvement Aid Summaries.” KLRD staff presented an overview decreased $5.5 million in FY 2018 and $3.5 of the FY 2018 and FY 2019 preliminary agency million for FY 2019. Capital Outlay Aid increased budget requests. The information provided $1.8 million in FY 2018 and $4.3 million for FY includes major changes to the FY 2018 and FY 2019. 2019 approved agency budgets. A review of the process for agency budget submission followed. The 2017 Legislature approved $16.2 billion in

Kansas Legislative Research Department 9-7 2017 Legislative Budget expenditures, which includes $6.6 billion from the majority of the supplemental request was due to SGF for FY 2018 and FY 2019. The approved the increase in salaries and wages and a budget included $11.9 million from the SGF for corresponding increase needed in KPERS funding. the legislative pay plan and supplementals of The statute related to the technical education $16.4 billion in FY 2018 and $16.8 billion for FY incentive went from $1,000 to $35.00 per 2019. This reflects an all funds increase of $386.1 certificate, the representative noted. The agency million above the approved FY 2018 budget, and representative suggested the statute should either an all funds increase of $601.4 million above the be repealed or be fully funded. Emphasis was approved FY 2019 budget. If the Legislature placed on the funding needs to address the adopts the budget requests, the SGF would be continued growth in the technical field. A copy of reduced from the previously reviewed profile from the LOB change from FY 2016 through FY 2018 $379.7 million to $298.3 million. was distributed to Committee members.

The FY 2018 and FY 2019 major Kansas Department for Aging and Disability supplemental requests followed. Staff noted that if Services and State Hospitals the budget requests and adjustments for FY 2019 were granted, the SGF ending balance would be KLRD staff presented an overview of the “FY reduced to a negative $0.8 million. A review of the 2018 and FY 2019 Preliminary Agency Budget FY 2017 through FY 2019 all funds expenditures Summaries” for KDADS and state hospitals and SGF expenditures, as related to operating expenditures, aid to local units of government, The supplemental requests for KDADS is other assistance, and capital improvements, $15.5 million in FY 2018 for the replacement of followed. the state hospitals’ patient management system and on-going maintenance and retroactive payment for Select Agency Overviews Medicaid applicants in adult care homes, and $299.0 million for FY 2019 to clear waiting lists Department of Education for individuals, rebase nursing facility rates, and replace the patient management system and for on- KLRD staff presented an overview of the “FY going maintenance. The funding to clear waiting 2018 and FY 2019 Preliminary Agency Budget lists was not included in last year’s budget. Summary” for the KSDE. The agency requests $18.3 million above the approved 2017 budget in Larned State Hospital’s (LSH) supplemental FY 2018 and $34.0 million for FY 2019 above the request in FY 2018 is $9.9 million, all from the approved budget for supplemental requests and SGF, for increased expenditures for the Sexual reappropriations, primarily for the KPERS Predator Treatment Program to cover the DSH contributions for covered payroll increases, funds from the past overpayment from DSH, and technical education incentives, and the $9.4 million, all from the SGF, for FY 2019 for monumental building surcharge. A summary of increased expenditures for the Sexual Predator operating expenditures by program funding Treatment Program to cover funds from past sources and funding history and key performance overpayment of DSH and salary increases for measures (which now includes kindergarten technicians and unclassified employees who were students as 1.0 FTE as opposed to 0.5 FTE) not included in the 2017 legislative pay plan. followed. A representative for KDADS responded to A KSDE representative responded to questions questions from Committee members regarding from Committee members. Staff noted the unfilled federal funding and other issues concerning LSH. positions will vary throughout the year. There The KDADS representative stated a survey was were six bond issues of approximately $100.0 conducted in August 2017 that identified three million that passed during the local 2017 election. main areas of concern, primarily related to the Discussion followed regarding cash balances and grievance process: patient rights, investigation the recommendation for local school boards to regarding abuse and neglect with staff upon develop a three-year plan for implementation, patients, and ligature points at OSH. Discussion which would be reviewed by the KSDE. A

Kansas Legislative Research Department 9-8 2017 Legislative Budget continued regarding adequate staffing. Challenges impact of funds transfers were reviewed. The of recruiting and retaining nurses and mental Lansing Correctional Facility requested less than health technicians, and culture and wage issues at what was approved due to a transfer to the DOC LSH were also noted. A study is underway Central Office to help fund pay increases statewide regarding a proviso for the construction of a 100- and vacant positions during construction of the bed and 200-bed facility with comparative costs, new facility. and a building evaluation at Osawatomie State Hospital (OSH) for demolition. Staff from the DOC responded to questions from Committee members regarding the building Adjutant General’s Department project: there are individuals housed at the Lansing Correctional Facility in the building that KLRD staff presented an overview of the “FY is to be razed; no final decision has been made 2018 and FY 2019 Preliminary Agency Budget regarding the EDCF; and the current execution Summary” for the Adjutant General’s Department. chamber is located at the Lansing Maximum The FY 2018 agency request is $16.3 million Facility Compound and would not be impacted. above the approved amount and the request for FY DOC staff stated no bids were received for the 2019 is $36.4 million above the approved amount. bonding design-build option, and only a lease- There are 12 supplemental requests with the purchase design bid was received. The DOC is budget increase, primarily for disaster relief looking at the most cost-effective means for the funding, and rehabilitation and repair of armories State while remaining budget neutral to pay for the and facilities. KLRD staff also reviewed a new building by staff savings and efficiencies summary of funding sources. gained with a smaller footprint.

Staff from the Adjutant General’s Department, Department of Revenue provided enhancement request information on the Adjutant General’s Department and emphasized KLRD staff provided an overview of the “FY the importance of the Pre-Disaster Mitigation 2018 and FY 2019 Preliminary Agency Budget Grant, which will require the Kansas Division of Summary” for the Department of Revenue. The Emergency Management to update the 12 regional agency request is an increase of $13.5 million in mitigation plans and will require the agency to hire FY 2018 and $13.9 million for FY 2019, a contractor to review and update current plans. attributable to the Automated Tax System Fund, The grant would be funded by $84,417 from the REAL ID implementation and maintenance costs, SGF and $253,249 from federal funds. A review of adjustments related to the legislative pay plan, and Federal Emergency Management Agency funding digital license plate production. requirements followed. A representative from the Department of Department of Corrections Revenue reviewed supplemental requests for the agency and stated the supplemental requests are KLRD staff provided an overview of the “FY for the legislative pay plan shortfall, the REAL ID 2018 and FY 2019 Preliminary Budget Summary” Act passed by Congress regarding minimum for the DOC. The overall request is $223.0 million security standards for State-issued drivers’ licenses in FY 2018, which reflects $14.2 million above the and ID cards, production of the digital license Legislature approved amount in FY 2018, plate, and the automated tax system fund. Samples primarily due to a reappropriation from the SGF of the digital license plate were shown to from the Evidence-Based Programs Account and Committee members. cloud-based e-mail support services and licensing, and $211.0 million for FY 2019, attributable to the Judicial Branch supplemental request to replace the server for the automated offender document system and for a KLRD staff provided an overview of the “FY funds transfer from the Kansas Juvenile 2018 and FY 2019 Preliminary Agency Budget Correctional Complex to the DOC. Lansing Summary” for the Judicial Branch. The agency Correctional Facility and Larned Correctional request is a decrease of $3.2 million below the FY Mental Health Facility agency budgets and the 2017 approved amount in FY 2018, primarily due

Kansas Legislative Research Department 9-9 2017 Legislative Budget to a delay in eCourt implementation, and an supplemental requests total $10.6 million for increase of $24.8 million above the approved capital improvements to the State Fairgrounds, to amount for FY 2019, primarily due to increasing replace the EXPO Center, and to renovate the salaries for non-judge and judge employees. For Bison Area. FY 2019, the agency’s supplemental request totals $19.6 million, primarily for salary increases for A representative from the Department of non-judge and judge salaries and additional Agriculture provided copies of the Kansas positions, and courtroom construction. Department of Agriculture budget overview for FY 2018 and the adjusted budget request for the An agency representative presented Department for FY 2018 and FY 2019. The information on the Judicial Branch FY 2018 and Department continues to use performance-based FY 2019 supplemental budget and detailed salary budgeting and actual numbers will be available comparisons with other states. The agency with the budget presentations in Spring 2018. representative stated Kansas judicial wages Department of Agriculture staff noted the agency currently rank 42nd or 43rd, and for cost-of-living and the Kansas Department of Wildlife, Parks and wages for judges, compared to other states, Kansas Tourism are working together on the Kansas Water ranked 45th in 2016. Plan. A review of the Ogallala water document followed, and everything but the water educational Department of Agriculture, Kansas Water component was implemented. Office, and State Fair Board A representative from the Kansas Water Office KLRD staff presented the “FY 2018 and FY reviewed supplements to the agency budget and 2019 Preliminary Agency Budget Summaries” for discussed priority projects focused on the Department of Agriculture, Kansas Water implementing the long-term vision of the water Office, and State Fair Board. The Department of supply for Kansas. The supplemental requests Agriculture budget request in FY 2018 is $4.8 includes three additional Water Resource Planner million above the FY 2017 approved amount, positions for implementation of the vision which is primarily due to $4.1 million in federal activities. Discussion followed regarding the funding for the LIDAR (light detection and Colorado and Montgomery County in Kansas ranging) topographic mapping program, and $1.2 waterways and recreational opportunities. million for FY 2019 in order to fill vacant positions, for capital outlay, and for a projected A representative from the State Fair Board increase in card processing fees. presented background information and budget enhancement requests for the State Fair and stated The Kansas Water Office budget request in FY communication is ongoing with Westar Energy 2018 is $601,979 above the FY 2017 approved regarding the status change from a medium to a amount, primarily due to a transfer request to the large user, and the exploration of alternative State Water Plan Fund for Milford Lake Watershed energy options. Regional Conservation Partnership program and Harmful Algae Bloom in-lake treatment pilot. For Regents Universities’ Efficiency Studies FY 2019, the agency request totals $8.3 million for 18 supplemental requests, including 3.0 new FTE A representative of the Board of Regents positions and the transfer from the SGF ($6.0 presented on overview of the measures universities million) and Economic Development Initiatives have undertaken to maximize efficiencies. Fund ($2.0 million) into the State Water Plan Fund Campuses continue to work on ways to reduce for programs related to the Vision for the Future of administrative costs, reduce electric utility costs, Water Supply in Kansas. and simplify administrative processes through coordinated efforts across the universities, as well The State Fair Board agency request in FY as the two-year colleges. Many of the efficiencies 2018 is an increase of $35,053 above the approved are based on the allocation of funding, competitive FY 2017 budget for capital improvements for the tuition rates, and transfer courses for students. State Fairgrounds. For FY 2019, the agency

Kansas Legislative Research Department 9-10 2017 Legislative Budget Kansas Public Employees Retirement updated and maintains data that is secure. The System Briefing on New Valuation budget request of $9.5 million in FY 2018 and Report $4.0 million for FY 2019 would be for upfront costs, with a projected savings in following years A KPERS representative presented an of $4.0 million to $5.0 million. A review followed overview on the KPERS’ calendar year 2016 of the V-Block equipment that was purchased in actuarial valuation. Two significant factors in the prior years but was kept in storage. The OITS 2016 valuation included the 2017 legislative representative stated the vendor would take appropriation changes and the triennial experience physical access and use of this equipment and the study. A review of the State/School Employer State maintains the loan, as money is still owed on actuarial and statutory contributions followed. the V-Block. An additional $35.0 million would KPERS payments of $1.63 billion will be made have been needed to put this equipment in place over a three-year period beginning in 2017. Of due to inadequate weight and cooling issues. that, $258.0 million will be layered or paid over a 20-year period. A key factor impacting assumption State Employee Health Clinic changes was primarily due to the lowering of the investment return from 8.00 percent to 7.75 A representative of the Department percent, which increased the unfunded actuarial Administration presented an overview on the liability for all groups. The KPERS representative status of the new State Employee Health Clinic stated the unfunded liability is still estimated to be and the bid process pursuant to KSA 75-3737a. paid off in 2023. A review of the funding status Department of Administration staff noted the and value of assets followed. The unfunded funding was capped at $2.7 million from the State actuarial liability increased by $522.0 million to Employee Health Plan. Eight entities expressed $9.06 billion. Ideally, the trust fund is at 80 interest, and the only bidder that met the terms percent to 100 percent funded, which would help withdrew its bid due to negotiation issues that absorb any large economic down-turns, the were not allowable and required legislation. A RFP KPERS representative noted. The combined rate with the Health Care Commission and the for all groups is 67 percent. The employer Legislature’s directive to the Department of contributions and funds needed to maintain Administration agree that the process will generate “steady state” is $623.5 million for FY 2019. A more bids, allowing for contractual negotiations review of the employer contribution rate with a potential for savings to the plan. comparisons funding projections followed. Impacts of Agriculture on Commerce Office of Information Technology Services Update on IT Modernization A representative from the Department of Agriculture provided information on the Estimated A representative of the OITS provided an Economic Impact of Agriculture, Food, and Food update on IT modernization. A review of the Processing Sectors. Staff emphasized the impact of “Information Technology Consolidation Kansas agriculture, which is approximately 45 Feasibility Study” followed. The representative percent, or $6.5 billion, of the state’s economy and noted over 75 percent of the servers are over eight does not include food retail. The importance of years old, data centers are in need of significant growing the agricultural industry will be key to repairs, and there is a lack of funds and qualified statewide prosperity. In order to accomplish this staff to address issues. The impact to the State has goal, a growth strategy was implemented, which been outages, security breaches, and loss of entailed 350 meetings throughout the state with services within several state agencies. The OITS individuals to collect feedback regarding strategy is to become a service broker by challenges and opportunities in the industry. consolidating functions and services and Agriculture development of action plans are outsourcing opportunities. The focus is on underway, with industry leaders in 19 sectors, and operations, data centers, and servers. A review of will be available to legislators at the beginning of successful milestones followed. The impact of the 2018 Session. This involves promotional budget enhancements for OITS as an ongoing efforts, both nationally and internationally, for investment is important to an infrastructure that is partnership development.

Kansas Legislative Research Department 9-11 2017 Legislative Budget CONCLUSIONS AND RECOMMENDATIONS

Following its review and discussion, the Committee made no recommendations.

Kansas Legislative Research Department 9-12 2017 Legislative Budget JOINT COMMITTEE

Report of the Joint Committee on Pensions, Investments and Benefits to the 2018 Kansas Legislature

CHAIRPERSON: Representative Steven Johnson

VICE-CHAIRPERSON: Senator Jeff Longbine

OTHER MEMBERS: Senators Larry Alley, Laura Kelly, Ty Masterson, and Lynn Rogers; and Representatives John Barker, Daniel Hawkins, Broderick Henderson, Jim Kelly, Annie Kuether, Richard Proehl, and Tom Sawyer

CHARGE

The Committee is to consider the following:

● Legislation enacted during the 2017 Session affecting the Kansas Public Employees Retirement System (KPERS or Retirement System), particularly House Sub. for SB 21, which provides new working-after-retirement provisions;

● Performance of the pension obligation bonds issued in 2004 ($500 million) and 2015 ($1.0 billion);

● The overall funding ratio for the Retirement System;

● Various reports statutorily required to be submitted by KPERS to the Committee; and

● To fulfill the Committee’s duties and responsibilities, as provided by KSA 2017 Supp. 46-2201, to monitor, review, and make recommendations regarding the Retirement System.

January 2018 Joint Committee on Pensions, Investments and Benefits

ANNUAL REPORT

Conclusions and Recommendations

The Committee notes, assuming all assumptions are met in the future, the Kansas Public Employees Retirement System (KPERS) would be fully funded by the end of 2036. To meet this goal, the employer contributions for the state-school group would need to be $623.5 million in FY 2019. The Committee notes those funds deposited in the KPERS Trust Fund are protected by state and federal law, and they are not subject to legislative reappropriation.

The Committee recommends the Legislature consider, during its deliberation during the 2018 Session, the extent to which State contributions to KPERS on the behalf of school districts should be counted towards education funding.

All asset classes (domestic equity, international equity, and private equity markets) produced a positive return in the third quarter of 2017. KPERS has experienced eight consecutive years of positive returns. From October 2016 to October 2017, the Trust Fund has grown by about $1.8 billion. Currently, KPERS’ portfolio is worth more than $19 billion. The Committee commends the KPERS Board and its staff for the historic returns the investment portfolio has achieved.

The Committee recommends the new changes to the federal tax code be evaluated to determine whether KPERS will be impacted.

The Committee notes the State has issued two pension obligation bonds. The average annualized total return for the 2004C and 2015H bond issues are 7.38 percent and 7.95 percent, respectively. The two bond series have added approximately $332.9 million to KPERS (2004C, $259.0 million; 2015H, $73.9 million). The Committee adds that while the arbitrage has been successful, the debt service is not part of the unfunded actuarial liability.

The Committee concurs with KPERS’ conclusion that KPERS is no longer prohibited from investing in companies that have a business presence in Sudan, even though some of the minor federal restrictions are still in place. Therefore, to ensure there is clarity in the future, the Committee introduces legislation that would repeal KSA 2017 Supp. 74-4921c and 74-4921d. The Committee notes the monitoring of the divestment policy has been an expense to KPERS. The Committee suggests, during the hearing process, the Legislature should consider exempting KPERS from KSA 2017 Supp. 75-3740e, pertaining to vendors’ policies towards Israel, which may increase operational expenses.

The Committee requests KPERS to provide various analyses, which are described in this report, during the 2018 Session to the standing committees of the House and Senate that are responsible for retirement policy.

Proposed Legislation: A bill that would repeal the obsolete provision that prohibits the Retirement System from investing in Sudan and related reporting requirements to the Committee.

Kansas Legislative Research Department 10-1 2017 Pensions, Investments and Benefits BACKGROUND The funding status has improved for one of the five membership groups: the local government The Joint Committee on Pensions, group. The funded ratio for the groups of KPERS Investments and Benefits, created in 1992, is state, school, Judges’ Retirement System, and the authorized by KSA 2017 Supp. 46-2201 to: Kansas Police and Firemen’s Retirement System has decreased. The Retirement System’s overall ● Monitor, review, and make funded ratio decreased from 67.1 percent in 2015 recommendations relative to investment to 66.8 percent in 2016. The unfunded actuarial policies and objectives formulated by the liability (UAL) for the entire Retirement System Kansas Public Employees Retirement increased in 2016 by $522 million, leaving $9.061 System (KPERS or the Retirement billion to be funded. Changes in actuarial System) Board of Trustees (Board); assumptions and a decrease in the assumed rate of return, from 8.00 percent to 7.75 percent, have ● Review and make recommendations diminished KPERS’ solvency. If all assumptions related to KPERS benefits; and are met in the future, KPERS should be fully funded at the end of 2036. For KPERS funding to remain at a steady state, state-school employer Consider and make recommendations on ● contributions in FY 2019 will need to be $623.5 the confirmation of members nominated million, which includes $98.6 million for the by the Governor to serve on the KPERS normal employer cost rate, $518.5 million for the Board. UAL, and $6.4 million for the deferred school contribution of FY 2017. The Committee may introduce legislation it determines to be necessary. Bond Proceeds

The purpose of pension obligation bonds is COMMITTEE ACTIVITIES arbitrage, which assumes the State will pay a lower interest on servicing the bonds than what the The Committee met on November 27, 2017, to KPERS’ portfolio can earn over time. The State review KPERS long-term funding, the has issued two pension obligation bonds. The first performance of pension obligation bonds, newly was in 2004 for an amount of $500 million, gross enacted legislation, and investment performance. of fees (2004C bond issue), and the second was The Committee acknowledged receipt of issued in 2015 for $1.0 billion, net of fees (2015H information submitted by KPERS and introduced bond issue). In 2004, the Legislature approved a legislation. $500 million bond issue, which was issued with a 30-year maturity and an interest cost of 5.39 Review of KPERS Long-term Funding percent. KPERS received $440.165 million in net proceeds. Annual debt service is approximately The Committee reviewed the 2016 actuarial $33.0 million from the Expanded Lottery Act valuation, which is a snapshot of the financial Revenues Fund. In 2015, the Legislature approved condition of the Retirement System as of a $1.0 billion bond issue, which was issued with a December 31, 2016. The actuarial value was 30-year maturity and an interest cost of 4.68 estimated to be $18.256 billion. Actuarial assets percent. KPERS received $1.0 billion in net are calculated by “smoothing” investment gains proceeds. Annual debt service is approximately and losses over a five-year period. A market value $65.0 million from the State General Fund. The higher than the actuarial value means that deferred average annualized total returns for the 2004C and investment gains will flow through valuations over 2015H bond issues are 7.38 percent and 7.95 the subsequent four years. There is an estimated percent, respectively. The two bond series have $566 million in net deferred loss to be realized in added approximately $332.9 million to KPERS the outlying years. A year ago, the net deferred (2004C, $259.0 million; 2015H, $73.9 million). loss was $515 million.

Kansas Legislative Research Department 10-2 2017 Pensions, Investments and Benefits Overview of 2017 Legislation Enacted; classes (domestic equity, international equity, and Implementation of New Provisions private equity markets) produced a positive return. This period has been marked by an unusually low Staff from the Office of Revisor of Statutes level of market volatility. KPERS has experienced provided an overview of House Sub. for SB 21, eight consecutive years of positive returns. From which amended several provisions pertaining to October 2016 to October 2017, the Trust Fund working after retirement, and SB 205, which, in grew by about $1.8 billion. Currently, the KPERS part, exempted certain employees of the Board of portfolio has a market value of more than $19 Regents who are covered by the Regents’ billion. retirement plan, which is not administered by KPERS, from working-after-retirement provisions. CONCLUSIONS AND RECOMMENDATIONS KPERS staff, noting the working-after- retirement legislation has been positively received The Committee notes, assuming all by the school districts, said all is on track to assumptions are met in the future, KPERS would implement changes to working after retirement be fully funded by the end of 2036. To meet this that start January 1, 2018. goal, the employer contributions for the state- school group would need to be $623.5 million in Receipt of KPERS Reports FY 2019, which includes $98.6 million for the normal employer cost rate, $518.5 million for the The Committee acknowledged receipt from UAL, and $6.4 million for the deferred school KPERS of the statutorily required Sudan contribution of FY 2017. Divestment Report. The exposure to investments with significant business operations in Sudan has While in recent years there have been remained low and consistent over time, which was reductions to employer contributions deposited to estimated to be $55.7 million, or 0.29 percent, of the KPERS Trust Fund, once those moneys are the total KPERS investment portfolio. deposited, those funds may be used solely for the benefit of the KPERS members and the In 2007, legislation was enacted that restricted administration of the Retirement System. The the Retirement System’s investments in companies Committee notes those funds are protected by state engaged in business operations in Sudan. The and federal law, and they are not subject to statute also imposed an annual reporting legislative reappropriation. requirement to the Committee. KPERS staff explained Kansas law contains a repeal provision The Committee recommends the Legislature, that triggers when the United States revokes its during its deliberation during the 2018 Session, current sanctions against Sudan. KPERS, in consider the extent to which state contributions to consultation with its outside legal counsel, has KPERS on the behalf of school districts should be determined the presidential executive order issued counted towards education funding. The Supreme on October 12, 2017, has revoked the substantive Court has suggested KPERS contributions should, portion of the sanctions mentioned in statute, but a at the least, be considered, but to date no court few provisions of the original sanctions, such as decision has addressed the utility of KPERS relating to diplomatic offices and agriculture products, remain in place. KPERS suggested the The third quarter of 2017 continued strong Legislature might consider repealing KSA 2017 investment performance. All asset classes Supp. 74-4921c and 74-4921d for purposes of (domestic equity, international equity, and private clarity. equity markets) produced a positive return. KPERS has experienced eight consecutive years of Investment Performance positive returns. From October 2016 to October 2017, the Trust Fund has grown by about $1.8 The third quarter of 2017 continued a strong billion. Currently, KPERS’ portfolio is worth more performance in the equity markets, especially in than $19 billion. The Committee commends the the global market. For the third quarter, KPERS KPERS Board and its staff for the historic returns experienced a return of 3.0 percent. All asset the investment portfolio has achieved.

Kansas Legislative Research Department 10-3 2017 Pensions, Investments and Benefits The Committee recommends the new changes the minor federal restrictions are still in place. to the federal tax code be evaluated to determine Therefore, to ensure there is clarity in the future, whether KPERS will be impacted. the Committee introduces legislation that would repeal KSA 2017 Supp. 74-4921c and 74-4921d. The Committee notes the State has issued two The Committee notes the monitoring of the pension obligation bonds. The first was in 2004 divestment policy has been an expense to KPERS. for an amount of $500 million, gross of fees The Committee suggests the Legislature should (2004C bond issue), and the second was issued in consider, during the hearing process, exempting 2015 for $1.0 billion, net of fees (2015H bond KPERS from KSA 2017 Supp. 75-3740e, issue). In 2004, the Legislature approved a $500 pertaining to vendors’ policies towards Israel, million bond issue, which was issued with a 30- which may increase operational expenses. year maturity and an interest cost of 5.39 percent. KPERS received $440,165,000 in net proceeds. The Committee requests KPERS provide the Annual debt service is approximately $33.0 following information during the 2018 Session to million from the Expanded Lottery Act Revenues the standing committees of the House and Senate Fund. In 2015, the Legislature approved a $1.0 that are responsible for retirement policy: billion bond issue, which was issued with a 30- year maturity and an interest cost of 4.68 percent. ● An analysis of the impact on the UAL if KPERS received $1.0 billion in net proceeds. the State paid the remaining delayed Annual debt service is approximately $65.0 employer contributions but without the million from the State General Fund. The average payment of interest; annualized total return for the 2004C and 2015H bond issues are 7.38 percent and 7.95 percent, ● An analysis of the impact on the UAL if respectively. The two bond series have added the State did not pay the remaining approximately $332.9 million to KPERS (2004C, delayed employer contributions and $259.0 million; 2015H, $73.9 million). The interest; Committee adds that while the arbitrage has been successful, the debt service is not part of the UAL. ● Clarification on the minimum employer contribution amount necessary to be paid Upon receipt of the annual Sudan Divestment in FY 2019 for the state-school group so Report, the Committee received notice from as not to adversely affect the Retirement KPERS that the substantive portion of the System; and sanctions have been lifted by presidential executive order. The Committee concurs with KPERS’ conclusion that KPERS is no longer ● An estimate of a re-amorization schedule, prohibited from investing in companies that have a over a new 30-year period, using existing business presence in Sudan, even though some of data.

Kansas Legislative Research Department 10-4 2017 Pensions, Investments and Benefits JOINT COMMITTEE

Report of the Robert G. (Bob) Bethell Joint Committee on Home and Community Based Services and KanCare Oversight to the 2018 Kansas Legislature

CHAIRPERSON: Senator Vicki Schmidt

VICE-CHAIRPERSON: Representative Daniel Hawkins

RANKING MINORITY MEMBER: Senator Laura Kelly

OTHER MEMBERS: Senators Barbara Bollier, Bud Estes, Richard Hilderbrand (August and November meetings), and Jacob LaTurner (February and April); and Representatives Barbara Ballard, Susan Concannon, John Eplee, Jim Ward (February, August, and November), Chuck Weber, and John Wilson (April)

CHARGE

KSA 2017 Supp. 39-7,160 directs the Committee to oversee long-term care services, including home and community based services (HCBS). The Committee is to oversee the savings resulting from the transfer of individuals from state or private institutions to HCBS and to ensure that any proceeds resulting from the successful transfer be applied to the system for the provision of services for long-term care system. Further, the Committee is to oversee the Children’s Health Insurance Program, the Program for All-Inclusive Care for the Elderly, and the state Medicaid program, and monitor and study the implementation and operations of these programs including, but not limited to, access to and quality of services provided and any financial information and budgetary issues.

January 2018 Robert G. (Bob) Bethell Joint Committee on Home and Community Based Services and KanCare Oversight

ANNUAL REPORT

Conclusions and Recommendations

The Committee expresses the following concerns and adopts the following recommendations:

● KanCare 2.0 proceed as scheduled;

● The Kansas Department of Health and Environment (KDHE) include comprehensive dental benefits for adults in the KanCare 2.0 request for proposal;

● KanCare 2.0 include measures to reduce the waiting lists; ○ The Committee is concerned about the increase in Home and Community Based Services waiting lists; ● A comprehensive master plan addressing mental health be developed, including corrections;

● KDHE provide to the Senate Committee on Public Health and Welfare and the House Committee on Health and Human Services, by February 22, 2018, effective criteria and performance measures for the KanCare Clearinghouse and call center;

● The Kansas Department for Aging and Disability Services develop policies and practices for surveying long-term care facilities that will give surveyors latitude in interpreting deficiencies, provide adequate salaries and thorough training to enhance the work of surveyors, and monitor inspections and provide reports to the Committee regarding citations and fines;

● A letter from the Committee be sent to the Centers for Medicare and Medicaid Services requesting Kansas representation on a stakeholder group reviewing the nursing home survey process and a copy of the letter be sent to the Kansas congressional delegation. (Staff note: After further investigation, it was determined that such stakeholder group does not exist; therefore, no action will be initiated by the Committee regarding this recommendation at this time. The Chairperson has directed staff to advise Committee members of this development at the January 2018 meeting.);

● KDHE clarify the language regarding power of attorney (POA) documents to distinguish between POA for health care and POA for finances; and

● The Child Welfare System Task Force review and clarify Medicaid eligibility for children in foster care and consider streamlining eligibility to make the transition out of foster care more consistent and efficient.

Proposed Legislation: None

Kansas Legislative Research Department 11-1 2017 HCBS and KanCare Oversight BACKGROUND As required by statute, at the beginning of each regular session, the Committee is to submit a The Robert G. (Bob) Bethell Joint Committee written report to the President of the Senate, the on Home and Community Based Services (HCBS) Speaker of the House of Representatives, the and KanCare Oversight operates pursuant to KSA House Committee on Health and Human Services, 2017 Supp. 39-7,159, et seq. The previous and the Senate Committee on Public Health and Joint Committee on HCBS Oversight was created Welfare. The report is to include the number of by the 2008 Legislature in House Sub. for SB 365. individuals transferred from state or private In HB 2025, the 2013 Legislature renamed and institutions to HCBS, as certified by the Secretary expanded the scope of the Joint Committee on for Aging and Disability Services, and the current HCBS Oversight to add the oversight of balance in the HCBS Savings Fund. (See KanCare (the State’s Medicaid managed care Appendix A for the 2017 report.) The report also program). The Committee oversees long-term care is to include information on the KanCare services, including HCBS, which are to be Program, as follows: provided through a comprehensive and coordinated system throughout the state. The ● Quality of care and health outcomes of system, in part, is designed to emphasize a individuals receiving state Medicaid delivery concept of self-direction, individual services under KanCare, as compared to choice, services in home and community settings, outcomes from the provision of state and privacy. The Committee also oversees the Medicaid services prior to January 1, Children’s Health Insurance Program (CHIP), the 2013; Program for All-Inclusive Care for the Elderly (PACE), and the state Medicaid programs. ● Integration and coordination of health care procedures for individuals receiving state The Committee is comprised of 11 members: Medicaid services under KanCare; 6 from the House of Representatives and 5 from the Senate. Members are appointed for terms that Availability of information to the public coincide with their elected or appointed ● legislative terms. The Committee is statutorily about the provision of state Medicaid required to meet at least once in January and once services under KanCare, including access in April when the Legislature is in regular session to health services, expenditures for health and at least once for two consecutive days services, extent of consumer satisfaction during both the third and fourth calendar with health services provided, and quarters, at the call of the chairperson. However, grievance procedures, including the Committee is not to exceed six total meetings quantitative case data and summaries of in a calendar year, except additional meetings may case resolution by the KanCare be held at the call of the chairperson when urgent Ombudsman; circumstances exist to require such meetings. In its oversight role, the Committee is to oversee the ● Provisions for community outreach and savings resulting from the transfer of individuals efforts to promote public understanding of from state or private institutions to HCBS and to KanCare; ensure proceeds resulting from the successful transfer be applied to the system for the provision of services for long-term care and HCBS, as well ● Comparison of caseload information for as to review and study other components of the individuals receiving state Medicaid State’s long-term care system. Additionally, the services prior to January 1, 2013, to the Committee is to monitor and study the caseload information for individuals implementation and operations of the HCBS receiving state Medicaid services under programs, CHIP, PACE, and the state Medicaid KanCare after January 1, 2013; programs including, but not limited to, access to and quality of services provided and financial ● Comparison of the actual Medicaid costs information and budgetary issues. expended in providing state Medicaid

Kansas Legislative Research Department 11-2 2017 HCBS and KanCare Oversight services under KanCare after January 1, KanCare Overview and Update 2013, to the actual costs expended under the provision of state Medicaid services The Secretary of Health and Environment prior to January 1, 2013, including the reported KDHE submitted a request for a one-year manner in which such cost expenditures extension of the current (1115) Medicaid waiver are calculated; (1115 Waiver). The Centers for Medicare and Medicaid Services (CMS) approved the request in ● Comparison of the estimated costs November 2017; therefore, the current KanCare expended in a managed care system of program will continue until December 31, 2018. providing state Medicaid services before January 1, 2013, to the actual costs KanCare Cost Comparison expended under KanCare after January 1, 2013; and At the February meeting, KDHE submitted testimony stating KanCare had produced more than $1.4 billion in savings to the State and a ● All written testimony provided to the portion of those savings were used to eliminate (as Committee regarding the impact of the of August 2016) the physical disability (PD) provision of state Medicaid services waiver and reduce the intellectual and under KanCare upon residents of adult developmental disability (I/DD) waiver waiting care homes. lists. Upon discussion with the Committee, the Secretary of Health and Environment indicated the All written testimony provided to the $1.4 billion could also be classified as “cost Committee is available at Legislative avoidance.” At the November meeting, the Interim Administrative Services. Medicaid Director provided information indicating that actual expenditures in 2017 (through In developing the Committee report, the September) were about $400,000 less than the Committee is also required to consider the external 2012 projection for KanCare expenditures and quality review reports and quality assessment and about $600,000 less than was estimated for performance improvement program plans of each Medicaid expenditures without KanCare. managed care organization (MCO) providing state Medicaid services under KanCare. Medicaid Eligibility Backlog

The Committee report must be published on At the February meeting, the Secretary of the official website of the Kansas Legislative Health and Environment informed the Committee Research Department (KLRD). Additionally, the the number of unprocessed Medicaid applications Kansas Department for Aging and Disability was 1,680 and it was anticipated the backlog Services (KDADS), in consultation with the would be cleared by April 2017. At the April Kansas Department of Health and Environment meeting, the Secretary reported the number of (KDHE), is required to submit an annual report on unprocessed applications was 325. At the the long-term care system to the Governor and the November meeting, the Interim Medicaid Director Legislature during the first week of each regular reported, as of November 15, 2017, 2,799 session. unprocessed applications were past the 45-day requirement for an application to be processed. The Interim Medicaid Director also provided a COMMITTEE ACTIVITIES chart to the Committee showing the numbers of unprocessed applications past 45 days, by month, The Committee met twice during the 2017 from August 2015 to November 15, 2017. Session (February 24 and April 19) and twice for two days each during the interim (August 22 and Long-term Care Facilities 23 and November 28 and 29). In accordance with its statutory charge, the Committee’s work focused Backlog reduction. At the February meeting, on the specific topics described in the following the Secretary of Health and Environment informed sections. the Committee that KDHE had a five-point plan to

Kansas Legislative Research Department 11-3 2017 HCBS and KanCare Oversight reduce the long-term care (LTC) facility Request for proposal. The KanCare 2.0 RFP application backlog. The plan included 90.0 was posted in November 2017. The RFP indicates percent advance payment for any LTC application KanCare 2.0 contracts will take effect January 1, pending more than 45 days, a webinar for LTC 2019. Several conferees recommended changes staff working on eligibility, and an established not be allowed to the KanCare system without hotline for LTC facilities and staff. At the August legislative approval. (For additional stakeholder meeting, the Secretary indicated advanced comments, see Presentations on KanCare from payments were not made to LTC facilities; rather, Individuals, Providers, and Organizations on the LTC facilities that applied for advanced payments following page). had their applications expedited for processing. Office of Revisor of Statutes and KLRD staff Pilot project. At the February meeting, the provided information to the Committee regarding Secretary of Health and Environment also the KanCare 2.0 RFP, as follows: the five-year informed the Committee that KDHE had launched term of the 2.0 contract will begin January 1, a KanCare Clearinghouse Liaison pilot project. 2019, and end December 31, 2023; the RFP does The Secretary stated KDHE initiated the pilot not present a conflict with the statutory project to help skilled nursing centers resolve requirement for an independent third-party review Medicaid eligibility and claims issues. The and is silent on the issue of an external entity or Secretary also indicated the goal was to have a policy; the RFP includes significant liquidated statewide rollout. damages, not in the current KanCare contract, for MCOs and subcontractors; the liquidated damages The project was praised by conferees and are assessed at the sole discretion of the State; and appreciation was expressed regarding the the RFP requires MCO staff receive training to increased communication between nursing homes apprise eligible Medicaid recipients of Kansas’ and the Clearinghouse, which processed Medicaid program for work opportunities. eligibility applications. However, it was noted by conferees that pilot project participants 1115 Waiver renewal application. In June, experienced accelerated eligibility determinations KDHE held public meetings to collect stakeholder but the improvement was limited to those input. The stakeholders were asked to provide participating in the project and was not input on areas in which KDHE was proposing experienced systemwide. changes for KanCare 2.0. In November, after the renewal application was posted, KDHE held The Interim Medicaid Director indicated at the additional stakeholder public meetings. November meeting that KDHE would be expanding the pilot project to include all 330 At the November meeting, the Interim nursing homes by April 2018. Medicaid Director indicated the 1115 Waiver renewal application would be submitted to CMS KanCare 2.0 by December 31, 2017.

In 2017, KDHE began the process of renewing KLRD staff stated the 1115 Waiver renewal the KanCare program and the renewal program is application includes a work requirement and a 36- referred to as “KanCare 2.0.” KDHE is required to month lifetime cap for certain Medicaid recipients. obtain approval from CMS prior to making Neither of these provisions is in the current changes to the current KanCare program. The KanCare program. requested changes are incorporated into the 1115 Waiver renewal application. The contract with KanCare Process Improvement Working MCOs to administer the current KanCare program Group expires December 31, 2018; therefore, KDHE is required to go through the request for proposal A written-only update was provided to the (RFP) process to facilitate new MCO contracts. Committee from the Working Group at the February meeting. At the August meeting, the Kansas Medicaid Director provided an update on

Kansas Legislative Research Department 11-4 2017 HCBS and KanCare Oversight the Working Group’s progress. The Chairperson of available from 120 to 158; the waiting list has the Committee asked that parallel provider been reduced; and only one bid was received for credentialing be placed back on the Working the RFP regarding building and operating OSH. Group’s agenda for further review. Representatives The Secretary stated the sole bid was received from all three MCOs provided information on from CorrectCare, which is involved in a number various difficulties with standardization for of lawsuits. However, the Secretary has visited provider credentialing across the MCOs. five facilities operated by CorrectCare and was impressed. The Secretary stated that before signing Reports: Kansas Foundation for Medical a contract with a vendor, the information would be Care, Inc. provided to the 2018 Legislature for approval.

At the April meeting, a representative from the Larned State Hospital Kansas Foundation for Medical Care (KFMC) explained that KFMC is an independent quality A representative from KDADS provided review organization and has been evaluating information to the Committee regarding a Medicaid services since 1995. The KFMC complaint survey conducted at Larned State representative stated reviews are driven by CMS Hospital by CMS and KDADS August 21-24, standards and assess MCO compliance and 2017. The KDADS representative stated a validate an MCO’s performance, performance corrective action plan and updates to the plan were improvements, and information systems. The submitted to CMS on November 21 and 27, representative provided performance measures for respectively. The plan and updates addressed each of the MCOs, including the results of ligature points and insufficient purchase orders. consumer and mental health perception surveys. KanCare Ombudsman Managed Care Organizations’ Financial Update The KanCare Ombudsman provided information to the Committee at each meeting. In KDHE provided testimony indicating the February, the Ombudsman reported the Office has adjusted net income (loss) of the MCOs through a new website and would be starting a three-hour June 2017 was as follows: Sunflower, $2,492,255; training program for community organizations that Amerigroup, $11,092,619; and UnitedHealthcare, would like to learn more about Medicaid. $1,026,800. The number of contacts for the fourth quarter Kansas Eligibility Enforcement System of 2016 was 523. The number of 2017 first-quarter contacts was 825 and the number during the The Interim Medicaid Director stated the second quarter was 835. In the third quarter of Kansas Eligibility Enforcement System (KEES) 2017, there were 970 contacts, which is up 41.0 Phase III became fully operational in September percent from 2016. The third quarter of 2017 had 2017. The Interim Medicaid Director further stated the second-most contacts ever recorded by the KEES integrates eligibility to streamline the Ombudsman’s Office. Issues are not being application process, standardizes use of data and resolved as quickly as in 2016. The Ombudsman creates a single source of truth for all eligibility reported the higher number of contacts and the data, and provides a platform for beneficiaries to slower resolution is likely due to increased access information about medical and non-medical outreach efforts and more complicated issues, services in one location. respectively.

Osawatomie State Hospital Presentations on KanCare from Individuals, Providers, and The Secretary for Aging and Disability Organizations Services provided an update on Osawatomie State Hospital (OSH), as follows: in preparation for re- Written and oral testimony was presented at certification from CMS, OSH increased the beds each quarterly meeting. Some individuals and organizations stated appreciation for the help and

Kansas Legislative Research Department 11-5 2017 HCBS and KanCare Oversight services provided by the MCOs and relationships applications resulting in facilities not being developed with the MCOs that have allowed reimbursed in a timely manner. problematic issues to be addressed and resolved quickly. The following is a summary of the Children. Children’s mental health services: concerns and suggested solutions presented by families are not able to access the level of care conferees. they need in a timely manner, and residential facilities have more than 300 youth and children Concerns on waiting lists; the number of children served by KanCare has dropped. CHIP. The possibility of Congress failing to reauthorize CHIP. (Staff note: In December 2017, MCOs. Medicaid payments exclude “natural Congress granted a short-term extension of federal supports” from family or friends; however, MCOs funding for CHIP.) are not properly following the rule by coercing volunteers to provide services that would qualify Claims. Dilatory processing of claims, and for Medicaid payments; and MCOs are not coding problems; increasing time required to following the agency mandate regarding process Medicaid claims; and the inconsistencies premature placement of individuals diagnosed in processing claims among MCOs. with Alzheimer’s disease.

Clearinghouse. Ongoing poor communication Providers. Medical providers have incurred with the Clearinghouse and erratic responses from financial loss as Medicaid reimbursement rates the Clearinghouse. have dropped; financial hardship from the 4.4 percent Medicaid reimbursement cut to providers; Documentation. Inadequate or incomplete and workforce background checks still taking too documentation making it difficult to evaluate the long. effectiveness of KanCare programs and the strength of the long-term services and supports KanCare 2.0. The work requirement and the provider network under the seven HCBS waivers. 36-month lifetime limit for certain Medicaid recipients included in the request to CMS for Waiting lists. The growing waiting list for the approval of KanCare 2.0; decrease in time to file PD Waiver and the waiting list for all HCBS an appeal; sleep-cycle support (enhanced care Waivers; concern for the 3,000 individuals services) policy changes initiated by KDADS are remaining on the HCBS waiting lists, some of not being corrected; does not address self-directed whom have waited 7 years for services; and the care; does not address systemic problems, such as waiting lists have not been reduced since KanCare backlogs in the current system; does not address was implemented. mental health concerns; will restrict due process; the service coordination process needs to be Application backlog. The backlog and the clarified: MCOs should be required to use only uncompensated care resulting from the oversight personnel who are medically licensed; mishandling of nursing home eligibility and the current system of mental health service be applications. retained.

Crisis funding. The ten-day delay for crisis Other. Inconsistent VoiceCare service; failure funding is too long and the process is complex. to notify providers when a patient loses Medicaid; time and the high number of services that require Eligibility. Difficulty navigating the Medicaid pre-authorization; no expedited eligibility process eligibility process, and the eligibility backlog. for those near the end of life; contractual obligations for services to individuals with Alzheimer’s disease under KanCare have not been LTC facilities. Deficiencies in KanCare met; and lack of providers for autism services. service delivery have created problems for nursing homes and assisted living facilities, and care assessments have created a delay in Medicaid Recommended solutions

Kansas Legislative Research Department 11-6 2017 HCBS and KanCare Oversight KFMC review its annual evaluations of the Kansas Hospital Association; KVC Health KanCare program; expanding Medicaid would be Systems; LeadingAge Kansas; Life Centers beneficial to Kansas; the Legislature monitor the Family Support Organization; MidAmerica KanCare 2.0 MCO RFP as KDHE requests Alliance for Access; Mother and Child Health renewal of the 1115 Waiver with CMS; integrating Coalition; National Association of Social Workers, targeted case management with care coordination Kansas Chapter; Oral Health Kansas; Pathways to provide more comprehensive service for Alternative Center for Education; Residential seniors; recommended home care providers Treatment Services of Southeast Kansas; receive a pay increase and benefits, as an increase Riverfront Senior Residence; Sisters of Charity of would afford dignity to these caregivers; Leavenworth; Southeast Kansas Independent additional funding to address the HCBS waiting Living Resource Center; Stormont Vail Health; lists; carve out I/DD Waiver services from the United Community Services of Johnson County; managed care system; provide dental service for and Wyandotte County Fetal and Infant Mortality adults in KanCare 2.0; increase the reimbursement Review Board. rate for dental providers; suspend KanCare 2.0 and allow the next governor’s administration to Managed Care Organization Testimony develop a better system; more State oversight of the MCOs; increase Medicaid rates for autism Representatives of all three MCOs provided services; and streamline credentialing process for testimony and responses to presentations by applied behavioral analysis providers. individuals, organizations, and providers at each meeting. Conferees. Private citizens and representatives of the following organizations and A representative from Amerigroup provided providers testified or provided written-only information regarding Amerigroup’s involvement testimony before the Committee: AARP Kansas; with communities, strategies for dealing with the Alliance for a Healthy Kansas; Alzheimer’s opioid crisis, and improved sleep-cycle support. Association; Association of Community Mental The Amerigroup representative also stated 19.0 Health Centers of Kansas; Case Management percent of Amerigroup’s services are self-directed Services; Central Kansas Foundation; Children’s and 81.0 percent are agency-directed; Amerigroup Alliance of Kansas; Community Health Council, uses only licensed providers, whether in- or out- Wyandotte County; Community Living of-state; and Amerigroup’s 2016 profit was 0.2 Opportunities; Communityworks, Inc.; Disability percent and, as of November 2017, a 0.2 percent Rights Center of Kansas; Equi-Venture Farms, loss for 2017. LLC; Family Service and Guidance Center; Flint Hills Community Health Center; Genesis Family Representatives from UnitedHealthcare Heartland Community Health Center; GraceMed Community Plan provided information regarding Health Clinic; Integrated Behavioral Technologies, sleep-cycle support, a multi-tiered pharmacy plan InterHab; Jenian, Inc.; Johnson County Area for opioid management, and information on Agency on Aging; KanCare Advocates Network; sequential care for youth in foster care. A Kansas Action for Children; Kansas Adult Care UnitedHealthcare representative also stated all Executives; Kansas Advocates for Better Care physicians employed by UnitedHealthcare are (KABC); Kansas Appleseed Center for Law and licensed in Kansas and UnitedHealthcare’s profit Justice; Kansas Association for the Medically margin for 2016 was 0.3 percent and was the same Underserved; Kansas Association of Area for the first two quarters of 2017. Agencies on Aging and Disabilities; Kansas Association of Centers for Independent Living and Representatives from Sunflower discussed the the Self-Direction Care Providers of Kansas; organization’s approach for sleep-cycle support Kansas Association of Community Action and the initiatives Sunflower has in place to Programs; Kansas Association of Pediatric address opioid addiction. A representative from Dentists; Kansas Council on Developmental Sunflower also stated Sunflower’s 2016 profit Disabilities; Kansas Health Care Association and margin is 0.004 percent. Kansas Center for Assisted Living; Kansas Dental Association; Kansas Home Care Association;

Kansas Legislative Research Department 11-7 2017 HCBS and KanCare Oversight Representatives from each MCO discussed for Mental Health (state only) and Frail Elderly how their respective organizations address health (FE); PD Waiver Assessments; Temporary care effectiveness data and information set Assistance to Needy Families, the Reintegration requirements. and Foster Care contracts, and Out-of-Home Placements. Managed Care Organization Incentives Spring The Interim Medicaid Director explained 14 pay-for-performance measures serve as incentives The estimate for FY 2017 is an increase of for the MCOs. The Director stated that in calendar $25.1 million from all funding sources and $14.2 year 2015, UnitedHealthcare met 63.6 percent of million from the State General Fund (SGF) as the measures; Sunflower, 53.0 percent; and compared to the budget recommended by the Amerigroup, 59.0 percent. Under the current Governor and adjusted by 2017 Senate Sub. for KanCare contract, MCOs are being paid and then Sub. for HB 2052, the current year rescission bill. must reimburse KDHE for areas where they did not meet the measures. Beginning in 2019, KDHE Since an appropriations bill for FY 2018 and will shift to paying incentives based on what FY 2019 had not yet been passed, the starting measures have been met. point for the April estimates was the Governor’s recommendations for FY 2018 and FY 2019. The Medicaid Managed Care Study estimate for FY 2018 is an increase of $19.6 million from all funding sources and a SGF In late 2017, Leavitt Partners began decrease of $3.0 million compared to the FY 2018 conducting a study reviewing KanCare’s costs and Governor’s recommendation. The estimate for FY utilization, quality of care, and program initiatives. 2019 is an increase of $4.1 million from all A representative from Leavitt Partners presented funding sources and a SGF increase of $6.4 information to the Committee about the first of million above the FY 2019 Governor’s three topics: cost and utilization. The Leavitt recommendation. The combined estimate for FY Partners representative stated that under KanCare, 2017, FY 2018, and FY 2019 is an all funds Medicaid spent about $1.7 billion less than the increase of $48.8 million and a SGF increase of projected trend and, during the first year of $17.6 million. KanCare, expenditures shifted from hospital settings to HCBS settings. The remainder of the Fall study is projected to be completed in 2018. The estimate for FY 2018 is a decrease of $4.6 Clearinghouse million from all funds and an increase of $16.4 million from the SGF when compared with the KDHE contracts with Maximus to operate the budget approved by the 2017 Legislature. The Clearinghouse. A representative of Maximus estimate for FY 2019 is an increase of $259.1 outlined steps being taken to correct errors and million from all funds, including $50.0 million backlog issues at the Clearinghouse. from the SGF above the approved amount; a combined estimate for FY 2018 and FY 2019 Human Services Consensus Caseload results in an all funds increase of $254.5 million and a SGF increase of $66.4 million. Staff from the Division of the Budget, Kansas Department for Children and Families (DCF), Quarterly Home and Community Based KDHE, KDADS, Kansas Department of Services Report Corrections, and KLRD met April 18, 2017, to revise the estimates on caseload expenditures for At each Committee meeting, written testimony FY 2017 and FY 2018, and October 31, 2017, to was provided by KDADS on the average monthly revise estimates on caseload expenditures for FY caseloads and average census for state institutions 2018 and FY 2019. The caseload estimates include and LTC facilities. A representative from KDADS expenditures for KanCare medical programs; non- provided information on savings on transfers to KanCare programs, including Nursing Facilities

Kansas Legislative Research Department 11-8 2017 HCBS and KanCare Oversight HCBS waivers and the HCBS Savings Fund Anti-psychotic Drugs for Dementia Patients balance. (See Addendum A.) At the November meeting, the Interim Update on Renewal of Waivers Medicaid Director discussed the the recent goals published by CMS regarding reducing anti- KDADS received CMS approval for the psychotic drugs for dementia patients. A Serious Emotional Disturbance Waiver on April representative of KDHE stated the agency is 28, 2017. At the August meeting, a representative reviewing best practices and will provide guidance of KDADS reported that community mental health for state policies and policies for MCOs. A centers (CMHCs) provide eligibility representative from KABC stated the State is not determinations, plans of care, and service providing leadership in reducing the use of anti- provisions. CMS has informed KDADS that psychotic drugs and is not educating MCOs CMHCs cannot continue to perform all three regarding state policies. The KABC representative duties due to an inherent conflict of interest. recommended verifiable informed consent be KDADS is pursing a contract with third-party provided prior to administering anti-psychotic assessors to provide side-by-side assessments. drugs, KDADS provide better training for staff, and KDHE improve oversight of the MCOs. KDADS received CMS approval for the Autism Waiver on June 14, 2017. Three behavioral Foster Care and Medicaid services moved from the Waiver to the State Plan. A representative of DCF provided information Waiting Lists Update about issues related to Medicaid services for children in foster care. The representative stated At the November meeting, the KDADS DCF created a Medicaid liaison to coordinate Commissioner for Community Services and Medicaid services for foster children. Program Commission reported as of November 14, 2017, the HCBS I/DD waiting list had 3,603 Oversight of Long-term Care Facilities individuals and 8,963 individuals were receiving services, and 1,318 individuals were on the HCBS A representative of a LTC facility stated PD waiting list and 5,953 individuals were response by CMS and KDADS to deficiencies is receiving services. excessive and punitive. The representative asked that the Committee encourage surveyors to write Program for All-inclusive Care for the deficiencies commensurate with the level of harm the deficiency poses and to give an agency Elderly discretion to prevent G-level (actual harm that is At the November meeting, the KDADS not immediate jeopardy) deficiencies from Commissioner for Community Services and triggering a ban on admissions. Program Commission provided the following information regarding PACE: Midland, Via Christi A representative from LeadingAge Kansas Hope (VCH), and Bluestem are PACE sites and stated, in the past two years, citations for had a combined enrollment of 556 individuals; “immediate jeopardy” have increased KDADS was reviewing proposals for a new PACE exponentially and these citations have an site to be located in eastern Kansas; and an audit immediate and negative effect on person-centered was performed by the State and CMS of VCH’s care and can be financially devastating to high- program after concerns were reported. The quality facilities. Commissioner indicated CMS, KDHE, and KDADS were monitoring VCH’s plan of The KDADS Commissioner for Survey, correction. Certification and Credentialing responded to questions from Committee members. The Commissioner reported KDADS has 20 vacant survey positions, and in August 2017, new regulations regarding immediate jeopardy were

Kansas Legislative Research Department 11-9 2017 HCBS and KanCare Oversight issued by CMS, which has resulted in a drop in surveyors latitude in interpreting reporting. deficiencies, provide adequate salaries and thorough training to enhance the work of surveyors, and monitor inspections and CONCLUSIONS AND RECOMMENDATIONS provide reports to the Committee regarding citations and fines; The Committee adopted the following recommendations: ● A letter from the Committee be sent to CMS requesting Kansas representation on ● KanCare 2.0 proceed as scheduled; a stakeholder group reviewing the nursing home survey process and a copy of the ● KDHE include comprehensive dental letter be sent to the Kansas congressional benefits for adults in the KanCare 2.0 delegation. (Staff note: After further RFP; investigation, it was determined that such stakeholder group does not exist; therefore, no action will be initiated by the ● KanCare 2.0 include measures to reduce Committee regarding this the waiting lists; the Committee is recommendation. The Chairperson concerned about the increase in HCBS directed staff to advise Committee waiting lists; members of this development at the January 2018 meeting.); ● A comprehensive master plan addressing mental health be developed, including ● KDHE clarify the language regarding corrections; power of attorney (POA) documents to distinguish between POA for health care ● KDHE provide to the Senate Committee and POA for finances; and on Public Health and Welfare and the House Committee on Health and Human ● The Child Welfare System Task Force Services, by February 22, 2018, effective review and clarify Medicaid eligibility for criteria and performance measures for the children in foster care and consider KanCare Clearinghouse and call center; streamlining eligibility to make the transition out of foster care more ● KDADS develop policies and practices for consistent and efficient. surveying LTC facilities that will give

Kansas Legislative Research Department 11-10 2017 HCBS and KanCare Oversight APPENDIX A

ROBERT G. (BOB) BETHELL JOINT COMMITTEE ON HOME AND COMMUNITY BASED SERVICES AND KANCARE OVERSIGHT

ANNUAL REPORT FOR THE 2017 LEGISLATIVE SESSION

The Robert G. (Bob) Bethell Joint Committee on Home and Community Based Services and KanCare Oversight is charged by statute to submit an annual written report on the statewide system for long-term care services to the President of the Senate and the Speaker of the House of Representatives at the start of each regular legislative session. The authorizing statute (KSA 2016 Supp. 39-7,159) creating a comprehensive and coordinated statewide system for long-term care services became effective July 1, 2008.

The Committee’s annual report is to be based on information submitted quarterly to the Committee by the Secretary for Aging and Disability Services. The annual report is to provide:

● The number of individuals transferred from state or private institutions to home and community based services (HCBS), including the average daily census in state institutions and long-term care facilities; ● The savings resulting from the transfer of individuals to HCBS as certified by the Secretary for Aging and Disability Services; and ● The current balance in the Home and Community Based Services Savings Fund.

The following tables and accompanying explanations are provided in response to the Committee’s statutory charge.

Number of Individuals Transferred from State or Private Institutions to HCBS, Including the Average Daily Census in State Institutions and Long-term Care Facilities

Number of Individuals Transferred—The following table provides a summary of the number of individuals transferred from developmental disability (DD) institutional settings into HCBS during state fiscal year 2017, together with the number of individuals added to home and community based services due to crisis or other eligible program movement during state fiscal year 2017. The following abbreviations are used in the table:

● ICF/MR — Intermediate Care Facility for the Mentally Retarded

● SMRH — State Mental Retardation Hospital

● MFP — Money Follows the Person program

● SFY — State Fiscal Year

Kansas Legislative Research Department 11-11 2017 HCBS and KanCare Oversight DD INSTITUTIONAL SETTINGS AND WAIVER SERVICES*

Private ICFs/MR: Average Monthly Caseload SFY 2017 133

State DD Hospitals – SMRH: Average Monthly Caseload SFY 2017 300

MFP: Number discharged into MFP program – DD SFY 2017 30

I/DD Waiver Community Services: Average Monthly Caseload SFY 2017 8,926

*Monthly averages are based upon program eligibility.

Sources: SFY 2017—Medicaid eligibility data as of November 28, 2017. The data include people coded as eligible for services or temporarily eligible.

The following table provides a summary of the number of individuals transferred from nursing facility institutional settings into HCBS during SFY 2017. These additional abbreviations are used in the table:

● FE — Frail Elderly Waiver

● PD — Physical Disability Waiver

● TBI—Traumatic Brain Injury Waiver

FE / PD / TBI INSTITUTIONAL SETTINGS AND WAIVER SERVICES*

Nursing Homes-Average Monthly Caseload SFY 2017 10,047

MFP FE: Number discharged into MFP program receiving FE Services 54

MFP PD: Number discharged into MFP program receiving PD Services 102

MFP TBI: Number discharged into MFP program receiving TBI 4 Services

Head Injury Rehabilitation Facility 28

FE Waiver: Average Monthly Caseload SFY 2017 4,863

PD Waiver: Average Monthly Caseload SFY 2017 6,071

TBI Waiver: Average Monthly Caseload SFY 2017 453

*Monthly averages are based upon program eligibility.

Sources: SFY 2017—Medicaid eligibility data as of November 28, 2017. The data include people coded as eligible for services or temporarily eligible.

Kansas Legislative Research Department 11-12 2017 HCBS and KanCare Oversight AVERAGE DAILY CENSUS IN STATE INSTITUTIONS AND LONG-TERM CARE FACILITIES

Kansas Neurological Institute: Average Daily Census FY 2011 – 153 FY 2012 – 152 FY 2013 – 145 FY 2014 – 143 FY 2015 – 144 FY 2016 – 141 FY 2017 – 142 Parsons State Hospital: Average Daily Census FY 2011 – 186 FY 2012 – 175 FY 2013 – 176 FY 2014 – 174 FY 2015 – 173 FY 2016 – 163 FY 2017 – 160 Private ICFs/MR: Monthly Average* FY 2011 – 188 FY 2012 – 166 FY 2013 – 155 FY 2014 – 143 FY 2015 – 140 FY 2016 – 137 FY 2017 – 133 Nursing Facilities: Monthly Average* FY 2011 – 10,789 FY 2012 – 10,761 FY 2013 – 10,788 FY 2014 – 10,783 FY 2015 – 10,491 FY 2016 – 10,235 FY 2017 – 10,047 *Monthly averages are based upon Medicaid eligibility data.

Kansas Legislative Research Department 11-13 2017 HCBS and KanCare Oversight Savings Resulting from the Transfer of Individuals to HCBS

The “savings” through Money Follows the Person are realized only if and when an individual is moved into a community setting from an institutional setting and the bed is closed. This process would result in a decreased budget for private ICFs/MR and an increase in the MR/DD (HCBS/DD) Waiver budget as a result of the transfers.

For nursing facilities and state ICFs/MR, the process is consistent with regard to individuals moving to the community. The difference is seen in “savings.” As stated above, savings are seen only if the bed is closed. In nursing facilities and state ICFs/MR, the beds may be refilled when there is a request by an individual for admission that requires the level of care provided by that facility. Therefore, the beds are not closed. Further, even when a bed is closed, only incremental savings are realized in the facility until an entire unit or wing of a facility can be closed.

As certified by the Secretary for Aging and Disability Services, despite individuals moving into community settings that does have the effect of cost avoidance, the savings resulting from moving the individuals to home and community based services, as of December 31, 2017, was $0.

Balance in the KDADS Home and Community Based Services Savings Fund

The balance in the Kansas Department for Aging and Disability Services Home and Community Based Services Savings Fund as of December 31, 2017, was $0.

Kansas Legislative Research Department 11-14 2017 HCBS and KanCare Oversight Minority Report to the 2018 Legislature January 2018 From: Senator Laura Kelly To: 2017 Member of the Robert G. (Bob) Bethell Joint Committee on Home and Community Based Services and KanCare Oversight Re: KanCare 2.0 The Robert G. (Bob) Bethell Joint Committee on Home and Community Based Services and KanCare Oversight voted to recommend that the 2018 Legislature proceed with the KanCare 2.0 request for proposal (RFP) and the 1115 Waiver renewal application. I strongly disagree with this recommendation. I submit to the 2018 Legislature that proceeding with the RFP and application, as written, is not in the best interest of Medicaid recipients or the State of Kansas. Since its inception, KanCare has been plagued with problems, most of which have not yet been resolved. The Committee still routinely hears complaints about many aspects of the KanCare system almost five years after it was implemented. This continues to trouble me and many of our colleagues. Some of the ongoing complaints presented to the Committee include inconsistent processing of claims by the managed care organizations (MCOs); the backlog of applications which negatively impacts individual applicants and nursing facilities; the inability of the Clearinghouse to process applications in an efficient manner; and the lack of standardized credentialing for providers by MCOs. Additionally, the current RFP requires a five-year contract with the MCOs, beginning January 1, 2019. Therefore, the 2019 Administration will not have any opportunity to provide input regarding the operation of this important and troubled program. It is my recommendation that the 2018 Legislature require the Kansas Department of Health and Environment to halt KanCare 2.0 and request another one year extension of the current KanCare program. This will allow time to fix ongoing problems and allow the new administration to provide input into a system for which it will ultimately be responsible. Note: Senator Barbara Bollier and Representative Barbara Ballard concur with the above report.

Kansas Legislative Research Department 11-15 2017 HCBS and KanCare Oversight MINORITY REPORT REP. JIM WARD KANCARE OVERSIGHT COMMITTEE

Conclusions: 1. KDHE is the single state Medicaid agency and solely responsible for the Medicaid program in Kansas.

2. There are consistent and serious problems with the Kansas Medicaid program as operated under KanCare and its three Managed Care Organizations. (MCOs)

3. Hospitals, nursing homes and other health providers have had great difficulty getting timely payments for services.

4. Eligible Kansans needing health care have faced long waiting lists.

5. KanCare has presented eligible people needing health care unclear and difficult application procedures.

6. The restricted ombudsman currently in place provides little real help to Kansans trying to navigate the various challenges presented by KanCare.

7. In a letter dated January 13, 2017 from the Center for Medicare and Medicaid Services (CMS) numerous problems in the KanCare program were set out. Attached hereto as Exhibit #1. Based on a significant number of complaints regarding the KanCare program from beneficiaries, providers and advocates CMS took a series of steps to investigate the Kansas program including an on-site review. CMS concluded that Kansas was substantially out of compliance with Federal statutes and regulations as well as its Medicaid State Plan.

Kansas Legislative Research Department 11-16 2017 HCBS and KanCare Oversight 8. There were several specific findings:

a. Kansas failed to establish clear roles and responsibilities for State employees who administer and operate KanCare program. b. There was limited coordination between KDHE and KDADS which posed a risk to health and safety of Managed Long Term Services and Supports participants. CMS pointed out a lack of communication and collaboration between the state agencies. c. Kansas did not engage in sufficient oversight of the activities of the MCOs. (private insurance companies) d. CMS found the State's oversight of the MCOs has diminished over the 4 years that KanCare had been in operation. e. Public feedback consistently describes a lack of engagement and adversarial communication from the State. Stakeholders overwhelmingly report an inability to get clear and consistent information from the State and MCOs, making it difficult for KanCare enrollees to navigate their benefits. f. Stakeholders also note the State often does not respond to public comments or include changes in final policy documents to address public comments. g. MCOs requesting participants to sign incomplete forms without specific hours of services. MCOs revising care plans without participant input. h. Individualized care plans taking months to complete. 1. No MCOs require the signature of providers responsible for plan implementation. J· Lack of oversight and reliable data makes it difficult to determine whether sufficient providers are in the networks to serve the enrolled beneficiaries. k. MCO' s network data contained incorrect and inconsistent information.

Kansas Legislative Research Department 11-17 2017 HCBS and KanCare Oversight 9. 2017 Kansas legislature passed Senate Sub. For HB 2026 which attempted to address the concerns raised by CMS and others.

10. Insufficient time has passed to evaluate the effects of Senate Sub. For HB2026.

11. KDHE has failed to show steps required by Senate Sub. For HB 2026 have been implemented.

12. The state continues to have difficulties with safety at Osawatomie and Larned State Hospitals.

Recommendations: 1. KDHE shall postpone its request for proposals from potential insurance providers and a 1115 waiver necessary to implement KanCare 2.0. The agency may renew its request for new 1115 waiver and request for proposals from insurance providers in one year after demonstrating the problems outlined above have been resolved.

2. KDHE shall prepare a report on the implementation of each provision of Senate Sub. For HB 2026 and present it to the next meeting of the KanCare Oversight Committee.

3. Lifetime caps are inconsistent with quality health care and should not be part of the Kansas Medicaid program.

4. Lifetime caps are a barrier to health care access and will result in a deterioration of health outcomes.

5. The administration shall remove lifetime caps from any 1115 waiver application.

Kansas Legislative Research Department 11-18 2017 HCBS and KanCare Oversight 6. Work requirements for recipients of Medicaid in Kansas shall not be requested by any 1115 waiver until Medicaid expansion has passed into law and is fully implemented.

7. The limited ombudsman program currently in place for KanCare shall be enhanced to include the authority of the office of ombudsman to investigate complaints against KDHE, KDADS and any of the 3 MCOs. The results of said investigations shall be reported to the MCO in question and KDHE. An annual report of investigations and results be provided to KanCare Oversight Committee at each quarterly meeting.

8. The Attorney General or his designee shall appear and report progress on the hiring of an Inspector General to the KanCare Oversight Committee. The Attorney General or his designee shall report difficulties in hiring an Inspector General and make recommendations.

9. The legislature should carve out the Intellectual and Developmental Disability participants of Medicaid in Kansas from KanCare and KanCare 2.0. This community of patients shall be served under the traditional Medicaid program.

Kansas Legislative Research Department 11-19 2017 HCBS and KanCare Oversight DEP/\RTMENT OF I-IEALTI-1 & HUMAN SERVICES Centers f<.1r Medicare & Medicaid Services 60 l bst 12111 Street, Suite 355 K;msas City, !Vlissouri 64106

8ivision of Medicaid and Children's Health Operations January 13, 2017

Susan rvlosier, M.D. Secretary and State Health Officer Kansas Department of Health and Environment Curtis State Office Building I 000 SW .Jackson Street, Suite 340 Topeka, KS 66612

Dear Dr. Mosier:

This letter addresses the Kansas Department of Health and Environment's (KDI-IE) noncompliance with the requirements of the KanCare program, authorized under Section I l 15 of' the Social Security Act (the Act), provisions of Kansas' Home and Community-Based Services ()·!CBS) waivers, and Federal Medicaid statute and regulations. This noncompliance, which is detailed in the enclosed KanCarc Findings and Recommendations Report, places the health, welfare, and safety of KanCare beneficiaries at risk and requires immediate action.

The KanCare program cstabl ishes a managed care delivery system through a combination I I 15/1915(c) waiver for nearly all of the 425,564 Medicaid and Children's Health Insurance Program (CHIP) beneficiaries in Kansas. KanCarc's average annual costs total S3.4 billion.' The combined nature of the program means that some of the State's most vulnerable and medically complex individuals arc enrolled in managed care, such as those living in nursing facilities or enrolled in 1-ICBS waivers.

Throughout 20 16. CMS received a significant number of complaints and concerns regarding the r

1 J-:,·,n:.:n:; 01!/J."ltttnt:111 cJf /·luiJ!lh ;,.111tl Envinut111e11t. StarCJ T-i."iCill YoDr 2010. l

Kansas Legislative Research Department 11-20 2017 HCBS and KanCare Oversight Page 2 - Dr. Susan Mosier

regarding administrative oversight of the program. In addition, the on-site discussions and documentation review revealed a number of concerns regarding the operation of KanCare.

The results of our on-site review confirm that Kansas is substantively out of compliance with Federal statutes and regulations, as well as its Medicaid State Plan. Kansas has foiled to administer the KanCare program as required by section 1902(a)(4) of the Act and 42 C.F.R. ~ 431. 15. The results of CMS' on site review outlined in this letter and the accompanying report are particularly concerning given the large role KanCare plays in delivering care to Medicaid beneficiaries in Kansas. We have detailed some of the key findings of the review below, but want to underscore the serious nature of these concerns and the risks it poses to beneficiaries. These concerns affect beneficiaries' receipt of services necessary to stay in the community, beneficiaries' ability to access needed care, and the State's ability to ensure the health and wel fore of bcnc ficiarie.s.

Administrative Authority: 42 C.F.R § 431.l O(b); 42 C.F.R. § 441.745 CMS regulations require Stales to establish a Single State lv!edicaid Agency with ultimate admi11istmtive aul!writy over the kfedicaid program. The Single Stale 1\!ledicaid Agency is responsihle.fi>r tlze administration and supervision of tlze Medicaid Stale Plan, as well as any State operating agencies and/or co/llractors that pe,:form jimclions on rlze State Medicaid Agency's beha(f.' 0 The State has failed to establish clear roles and responsibilities for State employees who administer and operate the KanCare program. The State relied on a memorandum of understanding between KDHE and the Kansas Department of Aging and Disability Services (KDADS) that was last updated in 20 I 0, prior to the implementation of KanCarc. The memorandum references State departments that no longer exist and lacks criteria for KDHE to evaluate performance of KDADS. 0 Limited coordination between KDI-IE and KDADS poses a risk to the health and safety of Managed Long Term Services and Supports (MLTSS) participants, who may experience difficulty managing their benefits. Review of MCO oversight and performance reports is divided between KDHE and KDADS and the lack of communication and collaboration creates a knowledge gap between the agency that operates the I-ICBS waivers (KDADS) and the agency responsible for managed care contract implementation (KDHE). This lack of communication also reduces the State's ability to identify problems, determine whether identified problems arc improving in any systemic way, and initiate necessary changes at the l'vlCO level. o Kansas did not engage in sufficient oversight of the activities of the MC Os. While the State receives many reports from the MCOs, there is no evidence of significant analysis or subsequent program changes based on those reports. For example, recent MCO reports indicate that a low percentage of required health screenings were completed, but there is no evidence that the State provided feedback to the MCOs regarding completion of health screenings. The MCOs reported receiving little feedback on submitted reports, and the feedback that is provided is verbal rather than written. Further, rcp01iing is inconsistent among the MCOs, which limits the State's ability to track issues and identify trends

Kansas Legislative Research Department 11-21 2017 HCBS and KanCare Oversight Page 3 - Dr. Susan Mosier

across the program. For example, the levels used by each of the three MCOs to categorize critical incidents vary, resulting in inconsistent reporting to the State. o The State's oversight of the MCOs has diminished over the four years of Kan Care operation, as evidenced by its annual onsitc reviews of the MCOs and subsequent reports. The 2013 annual report was a comprehensive document, and corrective action plans were issued to the MCOs regarding identified issues. The 2014 and 2015 annual reports were each two pages long, with little content of substance . ., Public feedback consistently describes a lack of engagement and adversarial communication from the State. Comments from KanCare stakeholders at multiple stakeholder sessions overwhelmingly reflect an inability to obtain clear and consistent information from the State and MCOs, making it difficult for KanCare enrollees to navigate their benefits. o Stakeholders further noted that the State often docs not respond to public comments or include changes in final policy documents to address public comments. The State maintains the KanCare Advisory Committee, and the fvlCOs each maintain an advisory board, but these committees do not meet all applicable requirements. Furthermore, committee members indicated that the committee meetings did not provide opportunities for mcaningfi.tl public input.

Person-Centered Planning Process: 42 C.F.R § 441.301(c); 42 C.F.R § 441.725(b) CMS requires that service plans/or each participant in lvledicaid !·!CBS programs be developed rhro11gh a person-centered planning process that reflects t!ze ben~/iciw:v ·s individual preJerences and goals. The rules require that the person-centerecl planning process is directed by the participant. and may include other individuals as clzose11 by the participmzt. This planning process. and the resulting person-centered service plan, assist the partic1j;a11t in achieving persona! outcomes in tl,e most inlegrated commzmity setting, ensure clelive1:v c?f sen1ices that re.fleet personal preferences and choices, anti help assure the participanf 's health and it'e(fare. o CMS uncovered significant compliance deficiencies with the person-centered planning process, which included: MCOs requesting participants sign incomplete forms without the number of hours or types of services they would receive: MC Os revising person-centered plans without the participant's input; and MCOs failing to ensure provider signatures on person-centered plans as required. o One MCO indicated that while a service plan is developed for each waiver participant within 14 days of entering the waiver, the required person-centered plan is not developed until 3 to 6 months after services arc authorized. The delayed completion of the person-centered plans compromises safeguards meant to ensure that waiver services and supports reflect participants' individual preferences and goals. • None of the MCOs have processes in place that ensure all final service plans arc signed and agreed to by the pmiicipant or that the participant receives a copy of the final plan. All three MCOs described processes that required participants lo sign "interim" or "proposed" plans that were then reviewed and possibly revised by a utilization review committee within the MCO. If changes were made, MCOs attempted to obtain participant signatures on the final plans; but MCO stalTstalcc.l they nre not always successti.1! in obtaining those signatures.

Kansas Legislative Research Department 11-22 2017 HCBS and KanCare Oversight Page 4 - Dr. Susan Mosier

0 None of the three MCOs currently require the signature of providers responsible for plan implementation, as required by 42 C.F.R. § 44J .725(b)(9). The lack of member and provider signatures jeopardizes waiver participants' understanding of the services they should be receiving, and delivery of those services by providers.

Provider Access and Network Adequacy: 42 C.F.R § 441.730; 42 C.F.R. § 438.206 CMS requires Stales lo ensure that each MCO mainlains a network a/providers t/zal is suj.Jicient to provide adequate and timely access lo Medicaid services covered under the contract between the State and the MCO. o The State's approach to tracking, monitoring, and overseeing provider network adequacy and access to care for KanCarc consumers is limited. Given that Kan Care serves nearly all Medicaid and CHIP beneficiaries, many of whom live in rural and frontier areas known to be underserved, CMS would expect a more robust oversight process including proactive monitoring of the number of providers enrolled in each MCO's network in regions with known access issues. 0 MCOs must submit multiple reports to the State regarding access to care. However, there scemec to be little analysis or trending based on these reports at the State level. CMS staff have asked KDHE staff multiple times in late 2016 for the State's analysis of network adequacy. Although KDHE provided MCO provider network reports in response to these requests, CMS has never received any evidence of the State's analysis of network adequacy. 0 The provider network data produced by the MCOs for much of 2015 contained incorrect and inconsistent infom1ation on provider specialties related to I-ICBS, making the data not useful for analyzing trends in HCBS provider network adequacy. The MCOs report that the data now being reported is correct, after a data clean-up effort in 2015. 0 This Jack of oversight and reliable data makes it difficult to determine whether sufficient providers arc in the networks to serve enrolled beneficiaries, and to effectively track the impact of policy changes on provider networks.

Participant Protections: 42 C.F.R. § 438.100; 42 C.F.R. § 441.301(c)(2)(xiii); 42 C.F.R. § 441.302; 42 C.F.R. § 438.440 States are required to ensure that managed care enrollees are.fi·eeji·om any.form ct/restraint or seclusion used as a means o.f"coercion. discipline, convenience, or retaliation. To obtain HCBS waii·ers. States must assure CMS that necessw:v safeguards are in place to protect tlze health and we(lcrre c~/ be/1(;/iciaries c111d that any modification to an indivichwl 's Ji·eedollls 11/eels spec(lic requirements and is.fitlly documented ill the pe1:mn-centered service plan Final(v, Clv!S requires that States lnu! MCOs provhle i1!/brmatio11 lo enrollees regarding grievance, appeal, and .fi:iir hearing procedures and ti111e/iw11es, using a State-developed or State-approved description. 0 Staff of one MCO mistakenly believed that use of restrictive interventions were not permitted in any of Kansas' HCBS waivers. However, two waivers allow for restraints, restrictions, and/or seclusion in certain circumstances. Because this MCO did not correctly understand the rules around restrictive interventions, they did not document dghts restrictions in the person-centered plans as required.

Kansas Legislative Research Department 11-23 2017 HCBS and KanCare Oversight Page 5 - Dr. Susan Mosier

Therefore, safeguards to protect beneficiaries' health and welfare with regard to restrictive interventions could not be carried out. o The State docs not have a comprehensive system for reporting, tracking, and trending critical incidents. MCO staff indicated that there was no fom1al, systematic process for them to report critical incidents, or resolution of critical incidents, for their members to the State; rather, they would call or email State staff to report such incitients. Recent HCBS reports provided no data to demonstrate that unexpected deaths were investigated within required timcframcs; that reviews of critical incidents were initiated and reviewed within required timeframes; that the use of restraints, seclusion, or other restrictive interventions followed procedures as specified in the approved waivers; or that the unauthorized use of restrictive interventions was detected. The lack of oversight of critical incidents increases the risk that waiver recipients' rights, health, and safety could be injcoparclr

a During the implementation ofKanCare, the State permitted the MCOs to develop their own provider appeal processes. However, according to Federal rules. those processes shou[d have been developed or approved by the State. The State recognized that difficulties resulted from the differing provider appeal processes, and asked the MCOs to develop one stantiardized process in late 20 l 5. Until the new process is implemented, the MCOs continue to use differing provitier appeal processes, creating administrative burden for providers who must navigntc three diflcrcnt appeal processes.

Due to the severe and pervasive nature of the on-site review findings and the resulting impacts this has on the beneficiaries and providers, CMS is requiring Kansas to develop a Corrective Action Plan (CAP) describing the actions it will take to con-cct the identified noncompliance. KDHE must submit the CAP to CMS as soon as possible, anti no later than February 17, 2017. The CAP must include a detailed plan addressing each of the findings identified in the attacbecJ report. The CJ\P must also include the milestones anti dates specifying when the actions will be It.illy implemented: their impact on the health, welfare, and safety of waiver paiiicipants; uncJ a strategy for ongoing review anti monitoring of the KanCare program. CMS expects the State agencies responsible for the KanCare program to implement the CAP in an expeditious and transparent manner which includes engaging stakeholtiers on changes and planncti changes. [mplcmcntation of the CAP, once approved, will be monitored by CMS.

Federal regulations at 42 C.F.R. § 430.35 allow CMS to withhold Federal Financial Participation payments from a State after a finding that the State's plan fails to comply, or to substantially comply, with the provisions of section 1902 of the Act. In the event that Kansas fails to: 1) submit the required CAP in the incJicated timcframe, 2) submit a CAP that is sufficient to mitigate the issues, or 3) implement and monitor the CAP as approved by CMS, we plan to initiate formal compliance action as described in 42 C.F.R. § 430.35, including financial sanctions of State administrative funds. Kansas' execution of the CAP and measured performance improvement will ulti111:1tcly inform the extension of Kansas' I I 15 demonstration program , as well as !'t1turc managed care contracts and 191 S(c) waiver actions. KDHE is entitled to appeal the Jindings of noncnmpliancc pursuant to the procedures set forth at 42 C.F.R. Part 430, Subpart D.

Kansas Legislative Research Department 11-24 2017 HCBS and KanCare Oversight Page 6 - Dr. Susan Mosier

If you have any questions regarding this matter, please contact me at (8 I 6) 426-5925 or via email at James.Scotti (ii.!cms.hhs.g:ov.

Jan Associate Regional Administrator for Medicaid and Children's Health Operations

cc: Vikki Wachino Mike Nardone Eliot Fishman Mike Randol Christiane Swartz Tim Keck Codi Thurness Brandt Haehn Brad Ridley Susan Fout

Kansas Legislative Research Department 11-25 2017 HCBS and KanCare Oversight JOINT COMMITTEE

Report of the Joint Committee on State Building Construction to the 2018 Kansas Legislature

CHAIRPERSON: Representative Adam Lusker

VICE-CHAIRPERSON: Senator Rick Billinger

OTHER MEMBERS: Senators Marci Francisco, Laura Kelly, Carolyn McGinn, and John Skubal; and Representatives John Alcala, Steve Alford, J.R. Claeys, and Steve Huebert

CHARGE

The Committee is authorized by KSA 46-1701, which includes provisions allowing the Committee to meet on call of its chairperson at any time and any place within the state and to introduce legislation. The Committee is to:

● Study, review, and make recommendations on all agency five-year capital improvement plans;

● Review leases, land sales, and other statutorily required reports by agencies; and

● Travel throughout the state to observe State-owned buildings.

January 2018 Joint Committee on State Building Construction

ANNUAL REPORT

Conclusions and Recommendations

The Joint Committee recommended all of the agencies’ five-year capital improvement plans except for the following:

● Department of Corrections—The motion to approve the agency’s five-year capital improvement plan made no recommendation on the Lansing Correctional Facility construction project for a new facility.

● The Committee recommended the Department of Corrections restart the bidding process for the Lansing Correctional Facility construction project for a new facility and write the request for proposals to receive design-build proposals.

● The Committee recommended the Department of Corrections bring in stakeholders for the new Lansing Correctional Facility construction project, including mental health groups and the Sentencing Commission.

Proposed Legislation: None

BACKGROUND Terms of office are until the first day of the regular legislative session in odd-numbered years. The Joint Committee on State Building A quorum of the Committee is six members. The Construction was established during the 1978 chairperson and vice-chairperson are elected by Session. The Special Committee on Ways and the members of the Committee at the beginning of Means recommended the bill creating the each regular session of the Legislature and serve Committee, 1978 HB 2722, as a result of its until the first day of the next regular session. In interim study of state building construction odd-numbered years, the Chairperson is to be a procedures. Representative and the Vice-chairperson is to be a Senator; in even-numbered years, the Chairperson The Committee was expanded from six is to be a Senator and the Vice-chairperson is to be members to ten members by 1999 HB 2065. It is a representative (KSA 46-1701). composed of five members of the Senate and five members of the House of Representatives. Two The Committee may meet at any location in members each are appointed by the President of Kansas on call of the Chairperson, and is the Senate, the Senate Minority Leader, the authorized to introduce legislation. Members Speaker of the House of Representatives, and the receive the normal per diem compensation and House Minority Leader. The Chairperson of the expense reimbursements for attending meetings Senate Committee on Ways and Means and the during periods when the Legislature is not in Chairperson of the House Committee on session (KSA 46-1701). Appropriations serve on the Committee, or each may appoint a member of such committee to serve (KSA 46-1701). The primary responsibilities of the Committee are set forth in KSA 2016 Supp. 46-1702. The Committee is to review and make

Kansas Legislative Research Department 12-1 2017 State Building Construction recommendations on all agency capital If the Committee will not be meeting within improvement budget estimates and five-year ten business days, and the Secretary of capital improvement plans, including all project Administration determines it is in the best interest program statements presented in support of of the State to approve a change order or change in appropriation requests, and to continually review plans with an increase in project costs of $125,000 and monitor the progress and results of all state or more, 2000 HB 2017 provided an alternative to capital construction projects. The Committee also prior approval by the Committee. Under these studies reports on capital improvement budget circumstances, a summary description of the estimates that are submitted by the State Building proposed change order or change in plans is Advisory Commission. The Committee makes mailed to each member of the Committee, and a annual reports to the Legislature through the member may request a presentation and review of Legislative Coordinating Council (LCC) and other the proposal at a meeting of the Committee. If, such special reports to the appropriate committees within seven business days of the date the notice of the House of Representatives and the Senate was mailed, two or more members notify the (KSA 2016 Supp. 46-1702). Director of Legislative Research of a request to have a meeting on the matter, the Director will Each state agency budget estimate for a capital notify the Chairperson of the Committee, who will improvement project is submitted to the call a meeting as soon as possible. At that point, Committee, the Division of the Budget, and the the Secretary of Administration is not to approve State Building Advisory Commission by July 1 of the proposed action prior to a presentation of the each year. Each estimate includes a written matter at a meeting of the Committee. If two or program statement describing the project in detail more members do not request the proposed matter (KSA 2016 Supp. 75-3717b). The budget estimate be heard by the Committee, the Secretary of requirement does not apply to federally funded Administration is deemed to have advised and projects of the Adjutant General or to projects for consulted with the Committee and may approve buildings or facilities of Kansas Correctional the proposed change order, change in plans, or Industries of the Department of Corrections that change in proposed use (KSA 2016 Supp. 75- are funded from the Correctional Industries Fund. 1264). In those cases, the Adjutant General reports to the Committee each January regarding the federally The “comprehensive energy bill,” 2009 Senate funded projects, and the Director of Kansas Sub. for HB 2369, required the State to establish Correctional Industries advises and consults with energy efficiency performance standards for State- the Committee prior to commencing such projects owned and -leased real property, and for the for Kansas Correctional Industries (KSA 2016 construction of state buildings. State agencies are Supp. 75-3717b and 75-5282). required to conduct energy audits at least every five years on all State-owned property, and the The Secretary of Administration issues Secretary of Administration is prohibited from monthly progress reports on capital improvement approving, renewing, or extending any building projects, including all actions relating to change lease unless the lessor has submitted an energy orders or changes in plans. The Secretary of audit for the building. Each year, the Secretary of Administration is required to first advise and Administration shall submit a report to the consult with the Committee on each change order Committee that identifies properties where an or change in plans having an increase in project excessive amount of energy is being used (KSA costs of $125,000 or more, prior to approving the 2016 Supp. 75-37,128). change order or change in plans (KSA 2016 Supp. 75-1264). (This threshold was increased from $25,000 to $75,000 in 2000 HB 2017 and to $125,000 in 2008 HB 2744.) Similar requirements COMMITTEE ACTIVITIES were prescribed in 2002 for projects undertaken by the State Board of Regents for research and The LCC approved three meeting days for the development facilities and state educational Joint Committee on State Building Construction, facilities (KSA 2016 Supp. 76-786), and in 2004 of which there was to be one travel day. Those for projects undertaken by the Kansas Bioscience meetings were held September 26-27 and Authority (KSA 2016 Supp. 74-99b16). November 30, 2017. The Committee reviewed

Kansas Legislative Research Department 12-2 2017 State Building Construction agencies’ five-year capital improvement plans and agency spoke about the capital improvement plan. traveled to agency-occupied buildings around There was discussion about the window Topeka. All five-year capital improvement plans replacement on buildings and energy efficiencies were approved, although the Department of that might be gained. Corrections’ plan was modified as noted in the conclusions and recommendations. Board of Regents. The Director of Facilities for the agency spoke about the deferred and annual Five-Year Plans maintenance program at the universities. There was discussion about the backlog of maintenance Kansas Department of Labor. The Chief projects and the agency representative stated, at a Fiscal Officer of the Kansas Department of Labor certain point, it was cheaper to tear down older spoke to the Committee regarding capital buildings than to continue to try to maintain them. improvements for the Department of Labor. She There was additional discussion about the spoke of the specific requests the Department had Educational Building Fund. submitted for FY 2018 to FY 2023. An agency representative stated windows were replaced due University of Kansas (KU). The University to age. Architect spoke about KU capital improvement projects. He provided updates on current projects Kansas Insurance Department. The and asked to amend two projects for FY 2018: the Comptroller of the Kansas Insurance Department Regents Center/Biotech Lab and Watkins spoke to the Committee regarding the Memorial Health Center. The agency also Department’s capital improvement plan for FY provided information on two projects funded with 2018 through FY 2023. It was stated the windows gifts and by the KU Endowment Association: the on the agency’s building were either replaced or Horejsi Family Athletics Center, including a new repaired and all were repainted. volleyball facility and the Hoglund ballpark renovations. Kansas Department of Wildlife, Parks and Tourism. The Budget Director for the agency University of Kansas Medical Center. The explained the capital improvement plan for FY Director of Projects and Planning for the agency 2018 through FY 2023 and how the funds are discussed four construction projects, including a spent on the different projects. The agency was new Medical Education Building in Wichita. also asking for expanded funds for upgrades to various projects across the state. Kansas State University. The Associate Vice President for Facilities discussed numerous Kansas Department for Children and construction projects, which include the Kansas Families. The Deputy Secretary of Operations for Veterinary Diagnostic and Research Center. the agency described the capital improvement projects for the Myriad building, which the State Wichita State University. The Associate Vice will own outright in 2029. The Department pays President for Facilities discussed numerous into a fund for improvements in the amount of projects at the agency and provided an update on $64,725 ($0.75 per square foot) annually, with the the construction projects within the Innovation current balance in the account being $708,883. Campus.

Judicial Branch. The Chief Financial Officer Emporia State University. The Vice of the agency presented the capital improvement President of Administration and Finance spoke to plan. There was discussion over using docket fees the Committee about the projects being undertaken for the security guard relocation. The agency at the university. The major focus was on the representative stated the security guard issue was Morse Central and Northeast resident hall deemed a higher priority than filling positions. demolition and Abigail Morse Hall renovation.

Department of Administration. The Director Pittsburg State University. The Interim of Facilities and Property Management for the Director of Planning, Design and Construction for

Kansas Legislative Research Department 12-3 2017 State Building Construction the university discussed current and future The Committee discussed roof replacements and construction projects for the agency and provided the need for back-up generators. an update on the Block 22 project in downtown Pittsburg. Kansas Department for Aging and Disability Services and state hospitals. The Fort Hays State University. The Director of Facilities Architect for the agency provided Facilities Planning at the university provided an information on the capital improvement projects update on the construction projects and capital and plan for the agency and all the state hospitals improvement plan for the agency. throughout the state.

Department of Corrections. The Director of Kansas State Fair. The General Manger for Capital Improvements for the agency provided the agency provided information on the capital information on the capital improvement plan for improvement projects and plan for the agency. FY 2018 through FY 2023. There was also an There was discussion on the stormwater utility rate update of information on proposed new and the demand transfer from the State General construction at the Lansing Correctional Facility. Fund that has been inconsistent throughout the There was a presentation on the funding of the years. Lansing Correctional Facility project by a representative of the Legislative Division of Post Adjutant General’s Department. The Audit (LPA) and additional information from a Director of Public Works for the agency provided representative of the Office of Revisor of Statutes. information on the capital improvement plan for the agency. There was discussion on the Fort The Secretary of Corrections spoke to the Leavenworth readiness project. Committee about the Lansing Correctional Facility project and the findings of the LPA study. There Kansas Commission on Veterans’ Affairs was much discussion about the project and, at the Office. The Director of the agency provided time of the agency presentation, the Committee information on the capital improvement plan for took no action on the agency’s five-year capital the agency. There was discussion of the effects of improvement plan. a hail storm at the facility in WaKeeney.

Department of Commerce. The Building Kansas Department of Transportation. The Services Manager for the agency provided Director of Operations provided information on information on its capital improvement projects the capital improvement plan for the agency. There and budget. There was discussion about the was discussion on re-roofing projects. maintenance of the elevators. Kansas Highway Patrol. The Chief Financial Kansas Schools for the Blind and the Deaf. Officer provided information on the capital The Chief Operating Officer for the agencies improvement projects for the agency. There was provided information on the capital improvement discussion on a lease lot on Highway 24 in plans. He stated this is the last year for debt Topeka. service payments for the School for the Blind and the debt service payments for the School for the Additional Discussions and Reviews Deaf will end in FY 2020. In addition to the Committee reviewing the State Historical Society. The Executive agency’s five-year capital improvement plans, the Director of the agency provided information on its Committee asked to review the safety issues at the capital improvement projects throughout the state. Department of Revenue and received additional information on the Lansing Correctional Facility. Kansas Bureau of Investigation. The Executive Officer of the agency presented its five- Department of Revenue. The Secretary of year capital improvement plan to the Committee. Revenue addressed the Committee and answered questions about an incident that occurred in

Kansas Legislative Research Department 12-4 2017 State Building Construction Wichita (the shooting of a Department of Revenue Tours of Facilities. The Committee toured the employee on September 19, 2017, at Department following facilities, all in Topeka: offices). The Secretary stated the agency must deal with two separate security issues. Internal ● Kansas Department of Revenue, Scott th Revenue Service requirements (IRS Publication Building, 120 SE 10 Ave.; 1075) deal with the security of documents and records the agency handles. The agency must also ● Department for Children and Families, provide safety for employees with proper security Athene Building, 555 S. Kansas Ave.; measures. There was discussion on the security that was provided in Wichita and efforts being ● Department for Children and Families, taken to increase security there. There was also Myriad Building, 500 Van Buren Street; discussion of security at the Topeka facility.

Department of Corrections. The Secretary of ● Kansas Bureau of Investigation Corrections addressed the Committee and Headquarters, 1620 SW Tyler Street; provided testimony on the proposed agreement with CoreCivic to provide a new correctional ● Kansas Department of Revenue, Zibell facility at the Lansing Correctional Facility as a Building, 300 SW 29th Street; and lease purchase after 20 years. ● Department for Aging and Disability The Secretary noted the central prison Services, Kansas Neurological Institute, facilities were built in 1860 and need costly 3107 SW 21st Street. upgrades and increasingly expensive maintenance; he stated a new prison will provide more effective staffing and lower maintenance costs and will Statutorily Required Reports improve security; it will also reduce staff turnover (currently at 36 percent, as of the September Excess Property Report. The Director of meeting). By building at the present location, the Operations, Kansas Department of Transportation, Department of Corrections can utilize existing provided the Excess Property Report required by infrastructure, staffing, and community support. KSA 2016 Supp. 75-3516. There was no The proposed project includes 2 housing units (a discussion. 1,920-bed maximum security unit and a 512-bed minimum security unit with 75 percent 2-person Excessive energy use of State-owned cells and 25 percent 4-person cells) and modern buildings. The Director of the Office of Facilities ancillary support systems, all of which will and Property Management provided the provide significant staffing efficiencies and cost Committee with the recent additions to the report savings. since agencies are not required to report all buildings every year. There was discussion as to Reviewing the financing options, the Secretary why some buildings all have the same readings at stated no bids were received for a bond-financed the major universities and it was thought that these design-build facility and only 2 bids were received buildings were all on the same meter. It was also for a 20-year lease purchase. CoreCivic was noted there was large energy usage at the power chosen as the vendor for a lease-purchase facility plant buildings at the universities. There was costing $13.2 million annually. He stated the 20- additional discussion as to the usefulness of the year costs to the State with the existing facility report to the agencies. Each university total $950,777,950; 20-year costs for a new representative responded to questions as to how facility with CoreCivic total $927,101,749. The they used the information from this report. Secretary provided an overview of the advantages for the proposed project and outlined the Leases and Sales consequences of delaying the project. The Deputy Director and State Lease Administrator of the Office of Facilities and Property Management of the Department of

Kansas Legislative Research Department 12-5 2017 State Building Construction Administration provided the following leases to except for the Lansing Correctional Facility the Committee, all of which were recommended construction project as part of the Department of by the Committee: Corrections’ plan.

● Lease for the Kansas State Board of The Committee also recommended the Indigents’ Defense Services in Topeka; Department of Corrections restart the bidding process for the Lansing Correctional Facility ● Lease for the Department of Corrections construction project for a new facility and write in Salina; and the request for proposals to receive design-build proposals. ● Lease for the Kansas Department for Children and Families in McPherson. The Committee also recommended the Department of Corrections bring in stakeholders for the new Lansing Correctional Facility construction project, including mental health CONCLUSIONS AND RECOMMENDATIONS groups and the Sentencing Commission.

The Committee recommended all of the agencies’ five-year capital improvement plans

Kansas Legislative Research Department 12-6 2017 State Building Construction OTHER COMMISSIONS, COMMITTEES, AND TASK FORCES

Report of the Capitol Preservation Committee to the 2018 Kansas Legislature

CHAIRPERSON: Jennie Chinn, State Historical Society

SENATE PRESIDENT’S APPOINTEES: Senator Elaine Bowers; and Harrison Hems

HOUSE SPEAKER’S APPOINTEES: Representative Fred Patton; and Melinda Gaul

SENATE MINORITY LEADER’S APPOINTEE: Tim Graham

GOVERNOR’S APPOINTEES: Kim Borchers and Jeremy Stohs (one position vacant)

HOUSE MINORITY LEADER’S APPOINTEE: Representative Valdenia Winn

OTHER MEMBERS (EX OFFICIO): Frank Burnam, Kansas Department of Administration; and Peter Jasso, Kansas Creative Arts Industries Commission

CHARGE

The Committee is directed to:

● Review progress of the Brown v. Board of Education mural; and

● Consider Capitol grounds plans (which may include the Ad Astra Plaza).

January 2018 Capitol Preservation Committee

ANNUAL REPORT

Conclusions and Recommendations

The Committee directed Michael Young, the artist of the Brown v. Board of Education mural, to:

● Review the facial features of the male child on the right side of the mural to ensure his features are not depicted in a cartoon-like manner;

● Paint the teacher’s hairstyle in a manner that reflects the era, but is still timeless; and

● Leave the subtle depiction of the Ku Klux Klan in the background of the mural to reflect history and allow the audience to interpret the piece of art.

The Committee recommended the Kansas Department of Administration:

● Meet with Mr. Young to discuss and implement the lighting of the Brown v. Board of Education mural prior to the mural’s ceremonial unveiling to the public;

● Continue to fix fractures in the marble flooring of the Capitol Visitor Center with epoxy and to monitor the flooring;

● Update kiosk signs in the Capitol Complex with notations of “You Are Here” to ensure accuracy and improve the visitor experience;

● Work with the State Historical Society regarding signage for parking on Saturdays; and

● Update the directional arrows on signs outside the Capitol Complex directing visitors to the main entrance and the Capitol Visitor Center.

The Committee recommended the State Historical Society:

● Closely monitor the cracks in the Overmyer murals; and

● Proceed with obtaining cost estimates to stabilize and conserve the Overmyer murals, as necessary.

The Committee recommended the Report of the Capitol Preservation Committee to the 2018 Kansas Legislature be forwarded to the Joint Committee on State Building Construction.

The Committee supported completion of the Ad Astra Plaza project, without providing any state financing for the completion of the project.

The Committee supported the expansion of the Law Enforcement Memorial on Capitol grounds.

Kansas Legislative Research Department 13-1 2017 Capitol Preservation Committee The Committee supported the enactment of legislation for the Eisenhower statue on Capitol grounds.

The Committee supported the development of a Legislative Coordinating Council policy regarding non-controversial artwork in Capitol committee rooms.

Proposed Legislation: None

BACKGROUND the progress of the Brown v. Board of Education mural, heard an update on the progress of The Capitol Preservation Committee was fundraising efforts for the mural, discussed the created by the Kansas Legislature in 2010 to deterioration of the county map and marble approve renovation proposals in all areas of the flooring in the Capitol Visitor Center, discussed Capitol, the Capitol Visitor Center, and the Capitol the conservation of the Overmyer murals on the grounds to ensure the historical beauty of the areas first floor of the Capitol, heard concerns regarding is preserved, preserve the proper decor of those signage directing visitors to the main entrance and areas, assure that any art or artistic displays are the parking garage of the Capitol, received an historically accurate and have historic update on the Ad Astra Plaza project, heard an significance, approve the location and types of update on the expansion of the Law Enforcement temporary displays, and oversee the Memorial on Capitol grounds, discussed the reconfiguration or redecoration of committee enactment of legislation for the Eisenhower statue rooms within the Capitol. As provided by KSA on Capitol grounds, heard an informational 2016 Supp. 75-2269, the Division of Legislative briefing on artwork in Capitol committee rooms, Administrative Services has the responsibility of and discussed the work of a subcommittee. implementing the recommendations of the Committee. Progress of Brown v. Board of Education Mural The Committee is made up of 12 members, with the Governor appointing 3, the President of The Committee heard an update from the artist the Senate and the Speaker of the House each and an update on fundraising efforts for the mural. appointing 2, and the Minority Leaders of the House and Senate each appointing 1. The Update from the artist. The Committee Committee’s three ex officio members are the received an update from the artist of the Brown v. Statehouse Architect, the Executive Director of the Board of Education mural, Michael Young. Mr. State Historical Society, and the Director of the Young stated his goal for completion of the mural Creative Arts Industries Commission. The is February 1, 2018. He noted the changes he Governor has the authority to appoint the made to the original sketch include painting a chairperson from the Committee’s membership. more diverse group of students in the foreground of the mural, painting the teacher as African The Committee was granted one meeting day American, and bringing more jewel tone colors by the Legislative Coordinating Council (LCC). into the mural. Mr. Young also stated he added Ku Klux Klan (KKK) members in the far background of the mural to reflect history. It was noted the COMMITTEE ACTIVITIES mural will hang outside the Old Supreme Court Room in the Statehouse and, in this room in 1925, The Committee met on December 7, 2017, at the decision was made to prohibit the KKK in the Statehouse. During the meeting, the Kansas. Committee members agreed the subtle Committee received an update from the artist on depiction of the KKK should remain in the mural.

Kansas Legislative Research Department 13-2 2017 Capitol Preservation Committee After receiving an update on the progress of Conservation of the Overmyer murals. The the mural, the Committee discussed the hairstyle Committee received concerns from Capitol Visitor of the teacher in the foreground of the mural, the Center staff about cracks in the Overmyer murals facial features of the male child on the right side of on the first floor of the Capitol. The Committee the mural, and the installation of the lighting for discussed possible solutions and acknowledged the the mural prior to the mural’s ceremonial Overmyer murals should be stabilized and unveiling. conserved.

Update on fundraising efforts. The Signage for directing visitors. The Committee received a fundraising update on the Committee heard concerns from Capitol Visitor mural from the Executive Director of the Kansas Center staff regarding signage directing visitors to African American Affairs Commission. She noted the main entrance and parking garage of the a contract for the painting and installation of the Capitol. The staff relayed that visitors are often mural was signed on July 31, 2017, authorizing frustrated because they have difficulty finding the Mr. Young to begin work on the mural. The entrance to the building and the parking garage. contract for the mural has three phases with three payments. The Committee agreed to sign off on Capitol Landscape Plan Updates the mural to allow Mr. Young to receive the second phase payment. The goal for the third The Committee heard updates on the Ad Astra phase, completion and installation of the mural, is Plaza project and expansion of the Law scheduled for the mural’s ceremonial unveiling Enforcement Memorial on Capitol grounds, and tentatively set for February 22, 2018. The members discussed the enactment of legislation Executive Director noted three charitable for the Eisenhower statue on Capitol grounds. foundations are receiving funds for the mural project: Topeka Community Foundation, Brown Ad Astra Plaza. The Committee heard an Mural Project SB 54, and the Kansas Department update from Senator Hardy and a representative of of Administration. The amount raised, to date, is the Kansas Department of Administration $79,070, leaving a balance of $30,930 to be raised. regarding the Ad Astra Plaza project. The Ad Astra The Executive Director also remarked on recent statue on the top of the Capitol was to be media exposure of the mural. represented on a smaller scale on the Ad Astra Plaza, which is located on the southwest corner of Capitol Visitor Center Concerns the Capitol grounds. This project received approval through the legislative process years ago. The Committee heard Capitol Visitor Center concerns regarding the deterioration of the county Senator Hardy stated a plaque and pedestal map and marble flooring in the Capitol Visitor exist on Capitol grounds, but there is no replica of Center, the conservation of the Overmyer murals the statue on the pedestal. The replica statue to be on the first floor of the Capitol, and signage affixed on the pedestal in the Ad Astra Plaza is directing visitors to the main entrance and the complete and currently in Salina. Senator Hardy parking garage of the Capitol. assumed the responsibility of fundraising and told the Committee the amount needed to complete the Deterioration of the county map and project is $200,000. The Kansas Department of marble flooring in the Capitol Visitor Center. A Administration representative noted March 2018 is representative of the Kansas Department of the earliest construction can take place because of Administration provided the Committee with weather. The representative stated the Department information related to fracturing in the veins of the is acting as a facilitator between the parties and no marble on the county map and throughout the State money is involved. flooring of the Capitol Visitor Center. The representative noted the proposed repair is to fill Law Enforcement Memorial. A the voids with colored epoxy and to avoid representative of the Kansas Office of the Attorney excessive wear on the material by cleaning the General informed the Committee there is an marble by dusting, vacuuming, and wet mop rather unfortunate need to expand the Law Enforcement than with a machine.

Kansas Legislative Research Department 13-3 2017 Capitol Preservation Committee Memorial on Capitol grounds to recognize fallen concerns in the Capitol. The Chairperson noted law enforcement officers. Currently, the memorial she is handling such concerns herself because has 277 names, and the names of 13 officers have other subcommittee members have left the been added since 2010. Because only about 40 Committee. She noted major issues would open spaces remain, the Office of the Attorney continue to be presented to the full Committee on General recommended an outer ring be added to an annual basis. The Chairperson then selected a the existing memorial. The Committee subcommittee to consist of Chairperson Chinn, Chairperson commented the Legislature already Executive Director of the State Historical Society; approved the expansion of the memorial. The Frank Burnam, Director, Office of Facilities and representative noted the final drawing of the Property Management, Kansas Department of expansion should be ready for the Committee’s Administration; and Melinda Gaul, Legislative approval in December 2018. Director for House Speaker Ryckman. Representative Patton will serve as an adjunct Eisenhower statue. A representative of the subcommittee member. Kansas Department of Administration provided the Committee with an update on the Eisenhower statue on the northwest corner of the Capitol CONCLUSIONS AND RECOMMENDATIONS grounds. Several years ago, the Committee endorsed a plan for developing the landscaping of Following discussion, the Committee made the Capitol grounds, including the installation of a the following recommendations: future statue on the northwest quadrant of the grounds. The representative noted there is a plaque ● The Committee directs Mr. Young to: on the northwest corner honoring President Eisenhower, which was dedicated in 2015. The ○ Review the facial features of the male representative stated private fundraising efforts child on the right side of the mural to have taken place for erecting the statue and the ensure his features are not depicted in money is in hand, but enabling legislation is a cartoon-like manner; required before a statue or memorial can be placed on Capitol grounds. The Committee was informed ○ Paint the teacher’s hairstyle in a the statue would be a replica of the bronze statue manner that reflects the era, but is still by Kansas artist Jim Brothers that is in the U.S. timeless; and Capitol rotunda. ○ Leave the subtle depiction of the KKK Artwork in Committee Rooms in the background of the mural to reflect history and allow the audience The Committee heard an informational to interpret the piece of art; briefing on artwork in Capitol committee rooms by the Director of Legislative Administrative ● The Committee recommends the Kansas Services. The Director noted artworks previously Department of Administration: placed in committee rooms were removed during the renovation of the Capitol and those pieces are ○ Meet with Mr. Young to discuss and in storage. The Director told the LCC he would implement lighting of the mural prior work with the Committee and the State Historical to the mural’s ceremonial unveiling to Society to create a policy for hanging artwork in the public; the majority of the 13 committee rooms. The Director noted the only expense would be in moving the art and hanging the pictures. ○ Continue to fix fractures in the marble flooring of the Capitol Visitor Center with epoxy and to monitor the Issues to be Addressed by Subcommittee flooring; The Chairperson said, in the past, a subcommittee of three Committee members, all ○ Update kiosk signs in the Capitol from Topeka, would meet and take action on small Complex with notations of “You Are

Kansas Legislative Research Department 13-4 2017 Capitol Preservation Committee Here” to ensure accuracy and improve ● The Committee recommends the Report of the visitor experience; the Capitol Preservation Committee to the 2018 Kansas Legislature be forwarded to ○ Work with the State Historical Society the Joint Committee on State Building regarding signage for parking on Construction; Saturdays; and ● The Committee supports completion of ○ Update the directional arrows on signs the Ad Astra Plaza project, without outside the Capitol Complex directing providing any state financing for the visitors to the main entrance and the completion of the project; Capitol Visitor Center; ● The Committee supports the expansion of ● The Committee recommends the State the Law Enforcement Memorial on Historical Society: Capitol grounds;

○ Closely monitor the cracks in the ● The Committee supports the enactment of Overmyer murals; and legislation for the Eisenhower statue on Capitol grounds; and ○ Proceed with obtaining cost estimates to stabilize and conserve the Overmyer murals, as necessary; ● The Committee supports the development of a LCC policy regarding non- controversial artwork in Capitol committee rooms.

Kansas Legislative Research Department 13-5 2017 Capitol Preservation Committee OTHER COMMISSIONS, COMMITTEES, AND TASK FORCES

Report of the Child Welfare System Task Force to the 2018 Kansas Legislature

CHAIRPERSON: Representative Steve Alford

VICE-CHAIRPERSON: Senator Vicki Schmidt

LEGISLATIVE MEMBERS: Senators Barbara Bollier and Laura Kelly; and Representatives Linda Gallagher and Jarrod Ousley

NON-LEGISLATIVE MEMBERS: Phyllis Gilmore, Secretary for Children and Families (non- voting) [until retirement, 12/1/2017]; Deneen Dryden, Director of Prevention and Protection Services (PPS), Department for Children and Families (DCF) (non-voting) [until 12/28/2017]; Patricia Long, Director of PPS, DCF (non-voting) [from 12/28/2017]; Rachel Marsh, Saint Francis Community Services (non-voting); Lindsey Stephenson, KVC Kansas (non-voting); Hon. Daniel Cahill, district court judge, appointed by the Chief Justice of the Supreme Court (Chief Justice); Mickey Edwards, state director, Kansas Court Appointed Special Advocates, appointed by the Chief Justice; Alicia Johnson-Turner, citizen review board member, appointed by the Chief Justice; Mary Tye, foster parent organization representative, appointed by the Judicial Council; Serena Hawkins, guardian ad litem, appointed by the Judicial Council; Ashlyn Yarnell, family law attorney, appointed by the Judicial Council; Gina Meier-Hummel, licensed social worker, appointed by the Judicial Council [until appointment as Acting Secretary for Children and Families], Acting Secretary for Children and Families (non-voting) [from 12/1/2017]; Gail Cozadd, licensed social worker, appointed by the Judicial Council [from 12/1/2017]; Dr. Katherine Melhorn, Child Death Review Board representative; Sandra Lessor, Sedgwick County District Attorney’s Office, appointed by the Kansas County and District Attorneys Association; and Sgt. David Ohlde, Marysville Police Department, appointed by the Kansas Association of Chiefs of Police.

CHARGE House Sub. for SB 126 (2017) directs the Secretary for Children and Families to establish a Child Welfare System Task Force (Task Force) to study the Kansas child welfare system. The bill directs the Task Force to convene working groups within the following topic areas: the general administration of child welfare by DCF; protective services; family preservation; reintegration; foster care; and permanency placement. The bill also directs the Task Force and each working group to study a number of specific topics within the areas identified above. The Task Force is to submit a preliminary report to the 2018 Legislature and a final report to the 2019 Legislature.

January 2018 Child Welfare System Task Force

PRELIMINARY REPORT

Conclusions and Recommendations

The Task Force identified the following concerns regarding the child welfare system:

● High turnover levels of social workers due to stress, excessive caseloads, and low pay;

● Excessive caseloads and limited funding affect timely response for needed services;

● The increasing numbers of children and youth who are forced to sleep overnight in child placement agency offices because there is nowhere else for them to go after being removed from their homes;

● A significant decrease in number of beds for children and youth in psychiatric residential treatment facilities (PRTFs) in Kansas;

● The number of children and youth who are missing from the State’s child welfare system at any given time;

● An antiquated set of various computer systems within the Kansas Department for Children and Families (DCF) prevents communication between computers within DCF, as well as between DCF and the two child welfare system contractors;

● Excessive length of time for some adoptions to be completed after parental rights are terminated; and

● Lack of additional funding over recent years for family preservation services.

The Task Force adopted the following preliminary recommendations:

● A multi-year focus on recruitment and retention of social workers should be implemented, including DCF evaluation of the morale and tenure of the work force;

● Long-term incentives, supports, career path (advancement), professional development, ongoing training, supervision, student loan forgiveness, and competitive compensation for social workers who work in the child welfare system should be developed;

● Continuity of services and recordkeeping need improvement so that caseworker turnover does not affect delivery of services;

● Problems that have led to the closure of several PRTFs for children and youth should be addressed so that more PRTFs can be added;

● DCF should evaluate and explore options for combining stand-alone computer systems into a consolidated system, to respond to the recent audit performed by the Legislative

Kansas Legislative Research Department 14-1 2017 Child Welfare System Task Force Division of Post Audit and the federal Program Improvement Plan. Such consideration should include availability of federal matching funds and the system implemented by Indiana. DCF should provide the Legislature with a clear recommendation for computer system improvement and the Legislature should provide the funding required for any necessary feasibility study;

● Prompt adoptions after parental rights have been terminated, though improving, need further attention;

● Issues regarding youth who run from placement should be addressed, including evaluation of what facilities could be used for such youth;

● There should be consideration of preventative services that could be added or increased;

● DCF should review the evolution and continuum of placements used over the years; and

● The effect on the child welfare system of the consolidation of juvenile services within the Kansas Department of Corrections should be considered.

Proposed Legislation: None

BACKGROUND DCF to provide reintegration, foster care, and adoption services; The 2017 Legislature passed House Sub. for SB 126 (SB 126), directing the Secretary for ● The duties, responsibilities, and Children and Families to establish a Child Welfare contributions of state agencies, System Task Force (Task Force) to study the child nongovernmental entities, and service welfare system in the State of Kansas. Previously, providers that provide child welfare the 2015 and 2016 Special Committees on Foster services in the State of Kansas; Care Adequacy, the House Committee on Children and Seniors, and the Senate Committee on Public ● The level of access to child welfare Health and Welfare had examined various topics services, including, but not limited to, related to the child welfare system. (Note: Reports, health and mental health services and minutes, and testimony of these committees may community-based services, in the State of be found under each committee’s page at Kansas; www.kslegislature.org.) The increasing number of children in the SB 126 directed the Task Force to convene ● working groups to study the following topics: the child welfare system and contributing general administration of child welfare by the factors; Kansas Department for Children and Families (DCF); protective services; family preservation; ● The licensing standards for case managers reintegration; foster care; and permanency working in the child welfare system; and placement. Additionally, the Task Force and each working group were directed to study the ● Any other topic the Child Welfare System following topics: Task Force or working group deems necessary or appropriate. ● The level of oversight and supervision by DCF over each entity that contracts with

Kansas Legislative Research Department 14-2 2017 Child Welfare System Task Force The Task Force is to submit a preliminary ● One representative of Kansas Court report to the 2018 Legislature and a final report to Appointed Special Advocates, appointed the 2019 Legislature. by the Chief Justice of the Supreme Court;

One member of a citizen review board ORGANIZATION ● established pursuant to the Revised Kansas Code for Care of Children, SB 126 established the following members appointed by the Chief Justice of the and appointing authorities for the Task Force: Supreme Court; ● The Chairperson of the Senate standing Committee on Public Health and Welfare; ● One member representing a foster parent organization, appointed by the Judicial ● The Vice-chairperson of the Senate Council; standing Committee on Public Health and Welfare; ● One guardian ad litem with experience representing children in child in need of ● The Ranking Minority Member of the care cases, appointed by the Judicial Senate standing Committee on Public Council; Health and Welfare; ● One family law attorney with experience ● The Chairperson of the House standing providing legal services to parents and Committee on Children and Seniors; grandparents in child in need of care cases, appointed by the Judicial Council; ● The Vice-chairperson of the House standing Committee on Children and ● One social worker licensed by the Seniors; Behavioral Sciences Regulatory Board (BSRB), appointed by the Judicial Council; ● The Ranking Minority Member of the House standing Committee on Children and Seniors; ● One member of the State Child Death Review Board established by KSA 22a- 243, and amendments thereto, appointed The Secretary for Children and Families ● by the Board; or the Secretary’s designee, who shall be a non-voting member; ● One county or district attorney with experience in child in need of care cases, The Director of Prevention and Protection ● appointed by the Kansas County and Services for DCF, who shall be a non- District Attorneys Association; and voting member;

● One law enforcement officer, appointed by One representative from each entity that ● the Kansas Association of Chiefs of contracts with DCF to provide foster care, Police. family preservation, reintegration and permanency placement services, appointed by each such entity, each of whom shall be The appointments to the Task Force were a non-voting member; completed by mid-July 2017. In November 2017, Gina Meier-Hummel resigned her position on the ● One member appointed by the Chief Task Force as the social worker licensed by the Justice of the Supreme Court; BSRB, appointed by the Judicial Council, after being named Acting Secretary for Children and

Kansas Legislative Research Department 14-3 2017 Child Welfare System Task Force Families to succeed Secretary Gilmore upon her SB 126 required DCF to “provide assistance to retirement effective December 1, 2017. Upon working groups to prepare and publish meeting becoming Acting Secretary on December 1, Acting agendas, public notices, meeting minutes and any Secretary Meier-Hummel assumed the research, data, or information requested by a corresponding non-voting position on the Task working group.” With Task Force approval, DCF Force. The same day, the Judicial Council named contracted with the Kansas Health Institute (KHI) Gail Cozadd to replace Acting Secretary Meier- to provide much of this staff support. Hummel as the social worker representative. Effective December 28, 2017, Patricia Long The Legislative Coordinating Council (LCC) replaced Deneen Dryden as the DCF Director of approved three meeting days for each working Prevention and Protection Services and assumed group for 2017. Each working group met three the corresponding non-voting Task Force position. times. Copies of the reports submitted by the working groups to the Task Force are attached to Pursuant to SB 126, staff and meeting support this report as Appendix B. for the Task Force was provided by the Office of Revisor of Statutes, the Kansas Legislative Research Department (KLRD), and the Division TASK FORCE MEETINGS of Legislative Administrative Services. The LCC approved six meeting days for the Task Force in 2017. The Task Force met five WORKING GROUPS times: on August 4, September 19, October 10, November 14, and December 12. A teleconference At its August 4 meeting, the Task Force voted meeting scheduled for August 22 was canceled. to establish three working groups and directed each working group to study two of the topics August 4 Meeting assigned by SB 126. The working groups established were: Following the Chairperson’s welcome, members and staff of the Task Force introduced ● General Administration of Child Welfare themselves. KLRD staff presented an overview of and Foster Care; recent legislative activity related to the child welfare system, including the 2015 and 2016 ● Protective Services and Family Special Committees on Foster Care Adequacy and Preservation; and the activity of the 2017 House Committee on Children and Seniors that led to the passage of SB 126 and the creation of the Task Force. Staff ● Reintegration and Permanency Placement. reviewed the charge to and structure of the Task Force. Staff noted a resources page had been SB 126 directed the Task Force chairperson, created for the Task Force ( http://www. vice-chairperson, and ranking minority members kslegresearch.org/KLRD-web/Committees/ to appoint a chairperson and vice-chairperson for Committees-ChildWelfareSysTF-Resources.html) each working group. Each chairperson and vice- containing links to many of the reports, testimony, chairperson was then responsible for appointing and other documents related to recent legislative members of their respective working groups, activity regarding the child welfare system. The which SB 126 required consist of not more than resources page will be updated with Task Force- seven non-Task Force members and not fewer than related links and documents as the Task Force’s two Task Force members. Each non-Task Force work proceeds. member appointed to a working group was required by the bill to possess specific expertise related to the working group’s assigned topic of study. Appointments of working group members were completed in September 2017. A list of working group members is attached to this report as Appendix A.

Kansas Legislative Research Department 14-4 2017 Child Welfare System Task Force Overview of DCF Organizational Structure, DCF produces more than 125 reports Child Welfare System Case Process, and regarding various aspects of the child welfare Available Data and Reports system, samples of which were provided in the notebook and the remainder of which are available Kathy Armstrong, Assistant General Counsel online. for Prevention and Protection Services, DCF, provided the Task Force with an overview of a In response to questions, Ms. Armstrong notebook DCF provided to each Task Force addressed the role of the DCF Foster Parent and member. The notebook contains a variety of Youth Ombudsman; explained some of the information related to the Kansas child welfare common acronyms associated with the child system, including the DCF child welfare practice welfare system; noted the number of children model; federal Children’s Bureau factsheet; being removed for non-abuse/neglect reasons in overview of federal child welfare legislation; Kansas has been reduced due to recent changes; organizational charts outlining the Kansas child and stated that cases initially categorized as non- welfare system; Kansas child welfare factsheet; abuse/neglect may later be re-categorized as child protective services statistical reports; abuse/neglect due to additional findings. placement and permanency statistical reports; independent living program reports; reports Responding to questions regarding one-night regarding progress made toward federal objectives placements or overnight stays in contractor offices, and recommendations by Casey Family Programs Ms. Armstrong stated DCF would attempt to and the Legislative Division of Post Audit (LPA); produce reports providing additional information and assessment and prevention and child-in-need- regarding these situations. Ms. Armstrong also of-care (CINC) case flowcharts. noted other requests by Task Force members and stated DCF would provide responses as soon as Ms. Armstrong noted the large network of possible. persons and entities at the federal, state, and local levels that make up the child welfare system. Review of the Legislative Division of Post There is a large amount of federal law regarding Audit Report on Foster Care and Adoption the system with which the State must comply. The State must submit plans for federal review every A LPA staff member provided a review of the five years for Title IV-B programs and every three latest LPA performance audit report on foster care years for Title IV-E programs, both of which and adoption in Kansas. The report was issued in involve the child welfare system. There is also a three parts. Part One was issued in July 2016. Part Child and Family Services Review (CFSR) that Two was issued in September 2016. Part Three must be completed, focused on safety, was issued in April 2017. permanency, and well-being outcomes. Part One of the report dealt with three Ms. Armstrong reviewed the newly questions. Question One was whether DCF was implemented possible outcomes for investigations following adequate policies and procedures to of reports of abuse/neglect. Following ensure the safety of children during the removal investigation, reports may be categorized as and placement process. With regard to this substantiated, affirmed, or non-substantiated. DCF question, LPA found: does not have authority to remove children and is not a party to a CINC legal action. DCF presents ● DCF had not yet implemented several the findings from its investigations to the county recommendations for its child protective or district attorney, who decides whether to file a services (CPS) function and had not CINC action. Removal requires a court order, responded to all report center calls in a unless law enforcement removes the child from an timely manner. As of May 2016, DCF had unsafe situation into police protective custody implemented 1 of 9 safety-related (PPC). recommendations from a 2013 Casey Family Programs assessment of CPS function, and a child’s safety was not

Kansas Legislative Research Department 14-5 2017 Child Welfare System Task Force assessed timely in 5 of 40 investigations in foster care or adoptive homes with sufficient reviewed by LPA; living space and sufficient financial resources. With regard to this question, LPA found: DCF had not ensured that background ● ● DCF allowed nearly all requests for checks of individuals in foster homes exceptions (98 percent of approximately happen as often or as thoroughly as it 1,100 such requests during one 15-month should. Three types of background checks period), resulting in inadequate sleeping should occur, and they should occur for space for some children in foster care; both relative and foster placements;

● DCF did not have an adequate process to DCF had not always taken steps to ensure ● ensure licensed foster homes have monthly in-person visits happened for sufficient financial resources. Current laws children in foster care or adoptive homes and policies are vague with regard to this or for children reintegrated with their requirement, and DCF did not verify families. LPA noted that in most of the income information. LPA recommends the cases reviewed, poor documentation requirement be clarified; prevented LPA from being able to tell whether case management contractors and child placing agencies (CPAs) conducted ● There are few requirements related to some monthly visits. Monthly in-person capacity, living space, or financial aftercare visits of children in adoptive resources for adoptive placements, but few placements did not occur, likely because stakeholders had concerns; and DCF’s contracts and policies are not consistent; and ● CPAs both sponsor foster homes and regulate them, which may create a conflict ● Survey respondents expressed concerns of interest. with staff turnover, morale, and training. LPA recommendations for issues identified LPA recommendations for issues identified through Question Two included ensuring through Question One included completing the exceptions are thoroughly reviewed and only recommendations from the 2013 assessment for granted when in the best interest of the child, the report center; reviewing policies regarding clarifying the regulatory requirement for assessment of child safety and welfare; “sufficient financial resources,” and developing implementing procedures to ensure assessment policies and a process to better obtain and verify within the time assigned following a report center detailed financial information. call; ensuring background and registry checks are completed annually; reconciling statutory and Question Three was whether DCF’s criteria for regulatory requirements for fingerprint-based recommendations regarding the removal and checks of all persons residing, working, or placement of children are designed with a family volunteering in a foster home; ensuring persons in preference. With regard to this question, LPA a foster care home who are ten years of age or found that several aspects of the foster care and older have annual background and registry checks; adoption system are designed to keep family providing staff training on revised policies; members together, mainly due to federal considering annual background checks for relative requirements. Most stakeholders indicated there placement; and regularly monitoring a sample of was an appropriate emphasis placed on this, but cases to ensure monthly in-person visits are some indicated there was too much emphasis. conducted and considering penalties for non- compliance. Part Two of the report dealt with Question Four, which was whether DCF ensures all Question Two was whether DCF’s child applicable state and federal laws governing the placement process helps ensure children are placed

Kansas Legislative Research Department 14-6 2017 Child Welfare System Task Force foster care system in Kansas are followed. With because the contractors misinterpreted the regard to this question, LPA found: contracts’ experience requirements;

● DCF had not followed some of the safety Children in foster care received most of and living condition requirements ● reviewed in Part One of the audit, the physical and mental health services including some background checks, they needed, with some exceptions where monthly case-management visits, and there are inadequate community resources financial resource requirements; or inadequate processes for determining whether children received needed services, which can be exacerbated by ● According to 2014 and 2015 statewide change of case managers; single audits, DCF materially complied with most, but not all, federal It appears many counties and cities did not requirements. The areas with issues ● involved DCF controls related to have enough licensed foster homes to monitoring and paying the contractors; provide local placement options. In some cases, disparate data systems maintained by the two contractors and child placing ● DCF self-reported data shows Kansas met agencies may have contributed to long- or exceeded about half of federal outcome distance placements, and DCF could not requirements for FY 2016. DCF monitor if children were placed in consistently met requirements related to appropriate homes, in part due to lack of relative and sibling placements, but did data collection; not consistently meet requirements related to timeliness or stability; and ● DCF could be more proactive in monitoring and collecting management ● DCF must implement a program information about the foster care system, improvement plan (PIP) to address issues making better use of existing monitoring identified by a 2015 Child and Family tools, capturing additional critical data, Services Review (CFSR). and enforcing contractual performance requirements; Part Three of the report dealt with three questions. Question Five was whether the Kansas ● Information DCF maintained was not foster care system has sufficient capacity to adequate to ensure children were placed in provide necessary foster care services. With regard appropriate foster homes. DCF needs to this question, LPA found: accurate information regarding removals, placements, physical and mental health ● Both case management contractors had needs, and foster homes’ capacities and challenges employing enough case preferences. DCF data on children in its management staff, and a small portion of custody, including removal and case managers had high caseload levels placements addresses, was incomplete and exceeding DCF’s recommended limit of had numerous inaccuracies. Data on 30 cases. Both contractors use a team licensed foster homes was outdated and model to alleviate staffing shortages, and missing important open bed information. some survey respondents indicated staff DCF has recently begun to expand its use morale was low due in part to high of data in overseeing the foster care caseloads and turnover; system; and

● Family support workers within the team ● Several children were placed in foster model had sufficient education but not homes that did not comply with licensing always the required experience, in part standards, but DCF is making significant changes to the inspection process.

Kansas Legislative Research Department 14-7 2017 Child Welfare System Task Force Question Six was how the state’s performance inspection and renewal issues by implementing on federal outcomes for children and families has processes, policies, and procedures to monitor the changed over time. With regard to this question, license renewal process and ensure timely LPA found: inspections; DCF ensuring children in foster care receive needed physical and mental health services ● Kansas’ performance on the 11 federal by clearly establishing roles and responsibilities outcome measures reviewed did not and implementing policies and procedures to change significantly from 2000 to 2013; ensure consistent documentation of needs and and investigation of service provision problems; KVC and Saint Francis Community Services (St. ● While these measures may provide useful Francis) complying with contractual experience insights into Kansas’ performance, they requirements for family support workers, or have significant limitations, as they are working with DCF to amend the minimum self-reported and unaudited, and should requirements; legislative committees examining not be used to compare to other states due and considering amending case manager licensing to lack of consistent national standards requirements; and the LCC considering directing and significant differences between child an interim study to gather information on the welfare systems. availability of community-wide resources.

Task Force members requested LPA provide Question Seven addressed how the cost to the follow-up information regarding the updated rate State of directly providing foster care and adoption of waivers for sleep space requirements and a list services would compare to maintaining the current of follow-up actions DCF has taken in response to privatized system. With regard to this question, the audit recommendations. The information LPA found: regarding follow-up actions was provided after the meeting and is included in the minutes for this ● The State would incur an estimate of up to meeting. The updated rate of waivers was $8 million more in on-going costs and provided by DCF at the September 19 meeting. significant start-up costs to provide foster care and adoption services instead of private contractors; Other Business Working Groups ● Most of the $161 million in costs reported by contractors for FY 2016 were related to KLRD staff reviewed the SB 126 requirements child placement, salaries and benefits, and structure for Task Force working groups. operating expenses, child care, and transportation. DCF would have spent an Following discussion, the Task Force voted to estimated $164 to $169 million to provide establish three working groups, with each working the same services, as well as significant group assigned two of the topics required by SB start-up costs; and 126. The working groups are:

● There may be additional factors to ● General Administration of Child Welfare consider when comparing privatization to and Foster Care; a state-run system, including security of state funding, protection from legal action, ● Protective Services and Family access to charitable contributions, and Preservation; and stability. ● Reintegration and Permanency Placement. LPA recommendations for issues identified through the questions in Part Three included DCF The Task Force also voted to allow KHI to continuing to expand its capacity for data-driven provide the staff support services to working decision-making; DCF addressing home

Kansas Legislative Research Department 14-8 2017 Child Welfare System Task Force groups delegated to DCF by SB 126. DCF will be ● Data from contractors regarding number contracting with KHI to provide these services. of overnight stays in contractors’ offices; and Facilitator ● Updated percentage of the rate of Members discussed various persons and exceptions granted for living space in entities to be contacted regarding possible service foster homes. For 2017 to date, the as a facilitator for the Task Force. The Task Force combined approval rate for living space decided by consensus to hold a telephone and capacity exception requests is 86.3 conference, open to the public via broadcast in a percent. Statehouse meeting room, on August 22 to make a decision regarding a facilitator. (Note: This teleconference was subsequently canceled.) In response to questions by Task Force members, Ms. Armstrong stated the reduction in Meeting Dates non-abuse/neglect removals has resulted from a variety of initiatives, including a new assessment For the remainder of 2017, the Task Force tool and improvement in training, rather than just voted to establish a schedule of a meeting on the recategorization of removal reasons. DCF is third Tuesday of September, with monthly working to find ways to provide more services to meetings on the second Tuesday for the rest of the families. A variety of workgroups and DCF are year. trying to address the needs for increased facilities, beds, and psychiatric residential treatment facility September 19 Meeting (PRTF) availability.

The Chairperson began the meeting with a Task Force members noted DCF is not review of Task Force rules and teleconferencing responsible for providing PRTF placements. procedures. PRTFs are private facilities requiring pre- placement screening by managed care Revisor staff presented an overview of the organizations (MCOs) for Medicaid payment. Kansas Open Records Act and the Kansas Open PRTF placement and payment are overseen by the Meetings Act and their applicability to the Task Kansas Department of Health and Environment Force. (KDHE) and Kansas Department for Aging and Disability Services (KDADS). Because there are a Follow-up Information from August 4 limited number of PRTF beds available, even Meeting when a screening determines a foster child is eligible, there may not be a placement available Ms. Armstrong presented the Task Force with immediately. Both St. Francis and KVC operate information responding to requests from the PRTF facilities. August 4 meeting, including: In response to a question regarding possible ● Data regarding the number of children solutions to address the issue of one-night stays, removed from homes for abuse/neglect Rachel Marsh, St. Francis, noted St. Francis has reasons and non-abuse/neglect reasons; created a PRTF alternative. Issues related to funding, the number of children coming into care, ● Steps DCF has taken to reduce the number and reinvestment in communities needs to be of removals in non-abuse/neglect cases, explored. Ms. Armstrong stated the recent juvenile including policy and form revisions and justice reforms have moved some low or moderate additional reporting and review risk offenders back home for community-based requirements; services, but where such offenders do not have homes they have entered the foster care system. The Juvenile Justice Oversight Committee has a

Kansas Legislative Research Department 14-9 2017 Child Welfare System Task Force data subcommittee that is examining the impact of (chairperson), Senator Kelly (vice- this on the child welfare system. chairperson);

Ms. Meier-Hummel noted issues related to ● Protective Services and Family Medicaid and out-of-state placements taken to Preservation—Sgt. David Ohlde offset income loss may be impacting the (chairperson), Representative Ousley availability of PRTF beds. (vice-chairperson); and

Task Force members noted the importance of ● Reintegration and Permanency Placement addressing prevention issues, including parental —Alicia Johnson-Turner (chairperson), substance abuse. Representative Gallagher (vice- chairperson). In response to a question regarding what benefits are available for relative placements, Lindsey Stephenson, KVC Kansas, noted relatives Members discussed expectations and may apply for Temporary Assistance to Needy questions for the Task Force and the working Families (TANF) benefits or for benefits from the groups, including: contractor. Daycare assistance also may be provided. ● The need for caution regarding confidentiality requirements when Other Task Force Business discussing individual cases within the child welfare system. Individuals may Facilitator Proposals and Discussion have greater latitude to discuss specific details of individual cases than agency Judge Daniel Cahill introduced staff of the officials have under federal or state law; Office of Justice Programs Diagnostic Center, who presented via teleconference information regarding ● Whether testimony should be received by their work with states to facilitate evidence-based working groups, the Task Force, or both; strategies to public safety issues. They discussed the technical assistance they provided to Nevada ● The charge to and focus of the Task Force in stakeholder coordination and action planning is addressing system-wide issues, rather during Nevada’s child welfare system reform than resolving individual cases, although efforts. information arising from individual cases may help identify system-wide issues. Ms. Representative Gallagher reported efforts to Dryden noted concerns expressed to Task locate other possible facilitators had been Force members regarding specific cases unsuccessful. After discussion regarding the can be directed to the Ombudsman, Randy desired role of a facilitator and timeline to procure Lynd; and a facilitator, the Task Force requested Representative Gallagher continue discussions with the Diagnostic Center regarding Task Force ● It could be helpful to provide parameters facilitation and voted to approve entering into an or prompts for potential testimony to agreement with the Diagnostic Center as working groups or the Task Force. Several facilitator. members volunteered to draft a set of possible parameters or guidelines. Working Group Matters The Task Force voted to work toward a hybrid The Task Force Chairperson announced the approach to permit testimony to be heard by both chairpersons and vice-chairpersons of the working the working groups and the Task Force. groups had been selected:

● General Administration of Child Welfare and Foster Care—Sandra Lessor

Kansas Legislative Research Department 14-10 2017 Child Welfare System Task Force October 10 Meeting information regarding KVC, which has served as a lead contractor for foster care since 1996. He Kansas Foster Care Contracts Overview outlined the oversight system, which includes federal oversight through U.S. Department of Dan Klucas, Deputy Secretary of Operations, Health and Human Services CFSRs; state DCF, presented the Task Force with an overview oversight through DCF administrative reviews, of Kansas’ two current contracts with KVC case file reads, and audit services; regional and Kansas and Sst. Francis. These contracts began in community accountability through regional DCF FY 2014 and have been extended through FY and contractor meetings, community advisory 2019. DCF plans to award new contracts for FY boards, and foster parent advisory boards; and 2020. quality and fiscal accountability through systemwide financial audits and The Joint Each DCF region has a monthly base payment Commission (TJC) accreditation. Mr. Anderson and a monthly variable payment based on the provided a list of various data KVC submits to number of children in care in the region. These DCF on hourly, daily, weekly, monthly, quarterly, rates are renegotiated annually. Mr. Klucas and as-needed bases. KVC maintains an extensive, provided the Task Force with tables showing networked database that generates 691 automated contract rates for FY 2014-FY 2018 and sources of monitoring reports at various intervals. foster care funding. Additionally, reports can be individually queried from KVC’s database for research and training Mr. Klucas outlined the oversight DCF purposes. provides for the foster care contracts, including case reads; reviews and monitoring by regional Mr. Anderson provided the Task Force with a prevention and protections services staff; graphic showing the “KVC Family Centered monitoring of reimbursement, payment, and other Practice Model” and noted that currently almost financial information by the DCF Office of 50 percent of KVC youth are placed with a Financial Management; and audits by DCF Audit relative or non-related kinship provider and 77 Services. In November 2016, DCF established a percent of siblings are placed together. He also new Child Welfare Compliance Unit within Audit noted KVC provides a minimum of a full year of Services, which will provide independent aftercare services after permanency is achieved, oversight and review of the system (including both and Kansas’ strength in aftercare services has internal DCF components and external contractor drawn national attention. components). Initial audits by this unit have been of contractor policies, procedures, and In response to questions from Task Force documentation for monthly visits and placements. members, Mr. Anderson stated mental health It has begun work on audits of contractor services remain a large need in the child welfare compliance with contract terms and conditions, as system, and substance abuse and ability to access well as the background check process and capacity care are also large issues to be addressed; KVC exceptions. provides up-front training to staff regarding trauma-informed care; and most children in KVC In response to questions from the Task Force, Kansas PRTF beds have been in-state historically, Mr. Klucas stated consequences for contractors but recently other states have become interested in who fail to perform can include repayment, accessing beds due to KVC’s reputation for taking improvement plans, or consideration during the the most difficult youth. Currently, there are no next bidding process. Payments to contractors requirements that PRTFs take any particular youth. cover all costs except for Medicaid. Mary Hoover, Audit Services Director, DCF, stated the new Unit In response to a question regarding denied had not yet finalized any audits, but the first PRTF screens, Ms. Stephenson stated the denials reports should be complete by January 2018 and came from multiple MCOs, and KVC does not available for public review at that time. work with one MCO more than another.

Chad Anderson, Chief Clinical Officer, KVC Health Systems, provided the Task Force with

Kansas Legislative Research Department 14-11 2017 Child Welfare System Task Force In response to questions regarding firearms, and application of federal laws, such as the Mr. Anderson stated foster homes are required to Adoption and Safe Families Act (ASFA), and state report having firearms and must keep them locked laws, such as the Revised Kansas Code for Care of and stored separately from ammunition, which Children (CINC Code). Courts hold adjudication, also must be locked. These requirements also review, and permanency hearings in each case. apply to kinship placements. Contract standards establish processes and protocols to ensure courts are receiving necessary In response to further questions, Mr. Anderson information from the contractors, and local and stated 70 percent of KVC foster parents are trained community practice standards may exist that in trauma-informed care; KVC makes training require certain communications. Guardians ad available to police departments; and although litem conduct independent investigations and foster parents have said the required training for advocate for the best interests of their child clients. them should not be reduced, KVC has been trying Volunteer or court-appointed entities, such as to find ways to expedite the process and reduce the Court Appointed Special Advocates (CASAs) or barriers to becoming a foster parent. citizen review boards, may provide additional monitoring. Cheryl Rathbun, Chief Clinical Officer, St. Francis, presented the Task Force with information Oversight from the executive branch of state regarding St. Francis. St. Francis’ service design government occurs through standards set by the centers on practices that are family-centered, U.S. Department of Health and Human Services community-based, evidence-based, and trauma- Children’s Bureau and DCF. informed. She highlighted four aspects demonstrating St. Francis’ commitment to family- St. Francis maintains accreditation through centered care: TJC and has several internal monitoring processes, including an internal department that reviews ● Family engagement standards; quality of services to individuals and families and attempts to improve identified needs. A number of ● Tools and trainings for effective family relevant reports are generated at different intervals and child assessment; to help assess performance of the system. St. Francis also has risk management and customer care processes. ● Case planning techniques targeted to the assessed needs of the children and families; and The Kansas Legislature provides oversight through legislator inquiries, legislative post audits (36 of which have occurred since privatization), ● Service coordination that meets the needs and standing, special, and interim committees. of the child and family. In response to questions from the Task Force, Ms. Rathbun continued by providing details, Ms. Rathbun stated PRTFs were created in 2007 to examples, and resources for each of these four try to shorten congregate stays and get to family- components, as well as a visual summary of St. life settings more quickly; foster children have Francis’ methodology. different needs than an average person when it comes to residential treatment, and the community may not have the mental health services needed; Ms. Rathbun presented information to the MCOs are given guidelines for PRTF screenings, Task Force regarding monitoring of child welfare and interpretation and application of these services. She noted oversight, accountability, and guidelines has become more standardized; a High monitoring occurs at the individual child level, the Needs Task Force has recently been meeting to organization level, the community level, the state develop solutions for high needs youth, and its level, and the federal level. final report should be available soon; St. Francis has been working with DCF to increase the Judicial oversight occurs through Kansas number of youth residential center beds, although courts’ supervision of every child in foster care

Kansas Legislative Research Department 14-12 2017 Child Welfare System Task Force these facilities are not intended to serve high- with a relative. Relative placements do not have to needs youth like PRTFs are; average length of stay be licensed, but non-relative kinship placements in PRTFs used to be up to 14 months, then came do have to be licensed. Reimbursement rates for down to about 120 days, and now is closer to 40- non-licensed relative, pre-license (temporary) 60 days; the reduction in length of PRTF stay was kinship, and licensed kinship placements may driven by MCO screening and authorization; in St. differ. Francis’ experience, the 120-day average stay length seemed to produce the best results for youth Other Task Force Business in foster care; and acute care stays have more than doubled as PRTF stays have shortened. Facilitator Status Update

Follow-up Information from September 19 Representative Gallagher reported the Office Meeting of Justice Programs Diagnostic Center, which had presented at the September 19 meeting regarding The following DCF representatives presented possible facilitation, had informed her it would not the Task Force with information responding to be able to serve as a facilitator for the Task Force. requests from the September 19 meeting: Ms. She reported she had had initial conversations with Armstrong; Susan Gile, Program Administrator, Casey Family Programs regarding its ability to Assessment, Prevention and Interstate Placements; serve as a facilitator. Senator Kelly reported she and Tony Scott, Deputy Director of Performance had been working with the Annie E. Casey Improvement. The information presented Foundation on a future Task Force presentation included: and could visit with it regarding possible facilitator services. ● Change in categories for assessments for removal and current categories and The Task Force voted to authorize process; Representative Gallagher and Senator Kelly to continue researching Casey Family Programs and ● Change in removal numbers; the Annie E. Casey Foundation as possible facilitators for the Task Force, and to enter into an agreement with a facilitator if their evaluation ● Clarification regarding categorization of proves positive. drug and substance abuse; Working Group Updates ● Efforts to recruit foster families; KLRD staff reviewed the structure established ● Assistance to relative placements; and by SB 126 for the Task Force and working groups and for the working group membership selection process. The chairpersons of each working group ● Overview of data and assessment program reviewed the membership of his or her respective and prevention program. group and plans for upcoming working group meetings. (Working group membership lists are In response to a question regarding reducing attached as Appendix A.) The chairpersons of the the number of children removed for non- General Administration of Child Welfare and abuse/neglect reasons, Ms. Gile stated community Foster Care and Reintegration and Permanency health, PRTF, and prevention services would help Placement working groups provided preliminary reduce these numbers. reports of their initial meetings. (Full reports of these meetings are attached to this report as In response to questions regarding the Appendix B.) difference between relative and kinship placements, Ms. Armstrong explained kinship Testimony Parameters Discussion placements are with someone with existing strong emotional ties to the child but do not have to be KLRD staff presented a memorandum containing selected statutes and court rules

Kansas Legislative Research Department 14-13 2017 Child Welfare System Task Force addressing the confidentiality of information ● Time devoted to cases. Perhaps a related to the child welfare system. maximum caseload for each caseworker could be implemented, or assistance could Two members distributed a draft they had be provided to caseworkers in the same prepared of a proposed application for submission way paralegals provide assistance to of testimony from the public. Members discussed attorneys; possible time limitations and the need to determine when submitted testimony would become part of ● Communication between DCF, the public record. The Chairperson asked members subcontractors, and the courts. This can to review the proposed application for further be a consistent source of problems in the discussion at the November 14 meeting. courts in determining which entity is responsible for which task, but at the end Missing Children of the day, DCF bears ultimate responsibility; A member noted a news article published that day, October 10, reported there were three children missing from a foster home and asked for a ● Continuity between caseworkers. The response from DCF and the contractor turnover rate is high and creates issues, so representatives. Secretary Gilmore and Mr. transitions between caseworkers needs to Anderson provided information regarding be improved; protocols for missing children. A member stated the Secretary and other DCF officials at the state ● Availability of prompt services. Drug, level should have more current information alcohol, and mental health services are regarding children missing from placements. especially needed. While DCF and the Representatives of St. Francis and KVC reported contractors are to be credited for being there were 38 children currently missing from aware of the services that are available, placements made by each contractor (76 total). caseload, funding, and transportation The Vice-chairperson requested DCF and the issues are keeping the full amount of contractors provide the Task Force with monthly services needed from being delivered; updates of the number of children missing from foster home placements. A member suggested the ● Accurate and timely reports to the Task Force or a working group further explore the court. Judge Wine tries to review each potential impact of recent juvenile justice reforms case every 60-90 days, and accurate, on the number of missing children. timely reports from subcontractors are critical to this review, but inaccurate and November 14 Meeting delayed reports continue to be a problem across the state. Courts and the Task Force Overview of Courts’ Role in and Judicial should recommend accurate reports be Perspective on the Child Welfare System filed at least seven days in advance of a court date; The Honorable Taylor Wine, district magistrate judge in the Fourth Judicial District, provided the Task Force with an overview of a ● Realistic reintegration goals. Contractors magistrate judge’s role in the child welfare system. sometimes set reintegration goals that are While magistrate judges have limited jurisdiction, higher than the minimum standards this jurisdiction does include CINC cases. In these required of parents by law, requiring Judge cases, magistrate judges oversee the temporary Wine to overrule their recommendations custody hearing, adjudication, disposition, and to achieve reintegration; and review hearings. Judge Wine highlighted a number of areas for improvement in the child welfare ● Prompt adoptions. Timely approval of system, including: adoptions for children in foster homes by DCF has been an issue, although it is improving. Judge Wine encouraged the

Kansas Legislative Research Department 14-14 2017 Child Welfare System Task Force Task Force to recommend prompt and issuance of a court order for removal, or with law strict timelines for agency adoptions. enforcement removal of a child via PPC.

Judge Cahill stated that requirements under Judge Wine also noted, effective July 1, 2019, the CINC Code may be interpreted and applied in a juvenile detention center can no longer be used different ways in different judicial districts. For in a CINC case, which may complicate cases instance, Judge Cahill does not believe the CINC involving children who run from placement. The Code structures temporary custody hearings as system will need to adjust to address this issue, evidentiary hearings, but some judges in other perhaps through providing more residential judicial districts do. treatment facilities or alternative secure beds. After walking through the process from the In response to questions, Judge Wine noted temporary custody hearing to disposition, Judge not every judicial district has magistrate judges, Cahill stated direct placement would be good to which are more prevalent in the rural areas of the use in every case, but the statutory and contractual state. Judge Wine believes the CINC Code and due structure for family preservation services and process requires parents be provided with the reintegration efforts make such services and opportunity for an evidentiary hearing and counsel efforts easier to provide through a DCF placement, for temporary custody hearings, although there is a so he sometimes tries to arrange placement difference of opinion as to these requirements and through DCF with a family he otherwise would some judicial districts handle them differently. have used for a direct placement.

Judge Wine stated judges have the authority to In response to questions, Judge Cahill directly place children, but have more limited provided further detail regarding the PPC process control over placement after placing the child in in his district. After law enforcement removes a DCF custody. child from an unsafe situation, they will take the child to the local juvenile intake or assessment, Judge Wine clarified that DCF does not have unless there is reason to believe the child is a the authority to remove children from a home on human trafficking victim, in which case the child its own. A child may only be removed in two may be taken directly to the specified facility for ways: with a valid court order obtained after DCF such cases. Law enforcement will report what has presented the information supporting removal information they can to the district attorney’s to the county or district attorney’s office, or by law office as well as DCF for investigation, if DCF has enforcement in an emergency situation via PPC. not yet been notified. DCF will begin communication with the district attorney’s office Judge Wine stated a normal timeframe for an to determine if a CINC petition should be filed and in-state adoption, with no delays, would be six to will attempt to find an immediate placement with a nine months. home or relative, although an emergency shelter may have to be used. Judge Cahill provided the Task Force with an overview of the CINC process. He noted the Ms. Lessor clarified that PPC can extend for Office of Judicial Administration had provided up to 72 hours, and while DCF may be Task Force members with copies of the CINC investigating the child’s case, it remains the bench cards that help judges complete every step decision of law enforcement or the county or of a CINC case. district attorney if and when to release the child from PPC, unless a court order has been entered. Judge Cahill noted a small number of CINC cases are filed as private petitions, but most are In response to questions, Judge Cahill stated a cases filed by the State that begin either with a previous termination of parental rights (TPR) does DCF investigation leading to the filing of a not create a presumption of a child-in-need-of-care petition by the county or district attorney and the in a different child’s case, but it does create a presumption of unfitness in a subsequent TPR

Kansas Legislative Research Department 14-15 2017 Child Welfare System Task Force proceeding; he believes Judge Wine identified ● Required training for therapeutic foster some of the most important issues related to the homes; and child welfare system; DCF’s determination that a report is substantiated, unsubstantiated, or Lists of subcontractors for KVC and St. affirmed does not affect the court’s weighing of ● the evidence in a case; it would be helpful if Francis. services were easier to provide when direct placements occur; while federal and state law In response to a question regarding possible require annual permanency hearings, review is effects of recent TANF legislation on the foster needed more often, so he holds review hearings care system, Mr. Greene stated DCF was currently every 90 to 120 days; and recent changes in state analyzing the data related to this question and and federal law have provided older children with would update the Task Force when the analysis the opportunity to provide more input regarding was complete. Representative Gallagher noted an their permanency plans and other decisions in their upcoming report and conference at the University cases. of Kansas that also was analyzing the possible effects of TANF policies on child abuse and Follow-up Information from October 10 neglect. Meeting Senator Kelly asked if anyone present from Steve Greene, Director of Policy and DCF could respond to a recent article in the Legislative Affairs, and Tony Scott, Deputy Kansas City Star stating that notes were shredded Director of Performance Improvement, DCF, following DCF meetings. Mr. Greene said the only presented the Task Force with information documents that were shredded were ancillary notes responding to requests from the October 10 of observation during an interview. meeting, including:

● Criteria for enforcement of contracts; Other Task Force Business Working Group Reports ● The most recent child welfare-related audit available for review; Carlie Houchen, KHI, presented the Task Force with reports from each working group from ● Ratios between administration and the October and November working group services costs for contractors; meetings. (Working group reports are attached to this report as Appendix B.) ● Breakdown of active foster homes and licensed beds by various categories; Testimony Parameters and Process Task Force members continued the discussion ● Payments for relative home placements; from the October 10 meeting regarding potential parameters and processes for public testimony, ● Placement type reports; including the draft testimony application distributed at the October 10 meeting. A member reported KHI was willing to provide assistance in Data on removals where parental ● creating an online application form for submitting substance abuse was a contributing factor; testimony, receiving applications and testimony, and forwarding the applications and testimony to ● Updates on the number of missing the appropriate working groups. Members children and ages; expressed a desire to provide an alternate means for submitting testimony for persons who have ● Number of PRTF beds provided by KVC; limited online access, as well as a desire to publicize the opportunity to testify to interested parties and groups throughout the state.

Kansas Legislative Research Department 14-16 2017 Child Welfare System Task Force The Task Force voted to allow testimony to be in 1989 regarding the child welfare system led to a submitted electronically and via alternative means settlement agreement in 1993 that focused on child to KHI for forwarding to the appropriate working protection, case planning, and adoption. Some of group chairs, who may forward to Task Force the issues facing the system at the time included leadership any testimony that may be of interest to heavy caseloads for social workers and a failure to the entire Task Force. deliver services equally across the state. As Secretary, Ms. Chronister wanted to assure the 2018 Schedule safety, permanency, and well-being of children being served in the system; provide equitable Members discussed a proposed schedule of six services across the state; use outcomes to measure meetings in 2018 to be held in April, June, August, achievement, not just process-laden reviews such September, November, and December. KLRD staff as those in the settlement agreement; and eliminate reported that a request for six meeting days is the previous incentive to keep beds full. Before pending before the LCC. A member proposed Ms. Chronister left the Legislature, the Juvenile having a meeting in January or February instead of Justice Authority was established as a separate December. Further discussion was postponed until agency to distance child welfare from the juvenile the December meeting. justice system. Her experience in the Legislature led Ms. Chronister to realize a radical solution to December 12 Meeting the issue in the child welfare system was needed, especially to obtain increased funding for the The Vice-chairperson chaired the December system. This radical solution was privatization. 12 meeting and began the meeting by noting that While there was fear of change in the agency, by Ms. Meier-Hummel had been appointed the new the end of the transition to privatization Kansas Acting Secretary for Children and Families, was being recognized as having one of the best effective December 1, and that Gail Cozadd had child welfare systems in the country. been appointed to fill the Task Force position vacated by Ms. Meier-Hummel, who by virtue of Public Perspective her position would be continuing on the Task Force as a non-voting member. Mr. Ranney presented a public perspective on the privatization process. He noted the pre- Overview: History and Privatization of privatization system was dependent on social Kansas Child Welfare System workers personally finding placements for children who came onto their caseloads and there A panel of persons who served in or observed was heavy reliance on large group homes. SRS the child welfare system during the privatization repeatedly warned the Legislature it did not have process presented the Task Force with their sufficient funding for the system, and non-profit observations regarding privatization. The panelists organizations said they could provide care for included: Rochelle Chronister, former Secretary of more children with additional funding. A guardian Social and Rehabilitation Services; David Ranney, ad litem, Rene Netherton, filed the lawsuit in journalist; Bruce Linhos, former executive January 1989, accusing SRS of failing to care for director, Children’s Alliance; the Honorable Jim children in its custody, that ultimately was joined Burgess, former district court judge; Teresa by the American Civil Liberties Union and led to Markowitz, former commissioner, Department of the 1993 settlement agreement. While the 1989 Social and Rehabilitation Services (SRS); and Legislative Session featured extensive debate Laura Howard, former deputy secretary, health regarding child-protection efforts and child care policy, SRS. advocates lobbied for an additional $40.7 million to address these issues, ultimately the funding Overview and Vision increased only $5.0 million. SRS failed several quarterly audits after the settlement agreement, Ms. Chronister began by noting her and Governor Graves’ administration ultimately background as a legislator and research virologist, chose to privatize the system, which allowed the which kept her focused on data-driven outcomes State to sidestep most of the court’s rulings. The throughout her career. A class action lawsuit filed issues leading to and involving privatization

Kansas Legislative Research Department 14-17 2017 Child Welfare System Task Force bridged three different administrations, but money ● Increased use of family-based care has always been an issue. Under privatization, (including kinship); more money did become available and outcomes improved. The purpose of privatization today Keeping siblings together and keeping seems more focused on containing costs, but ● initially it was about improving outcomes. youth closer to home and in the same school; Provider Perspective ● Strengthening recruitment and retention of Mr. Linhos, presenting a private provider’s foster parents; perspective, noted before privatization some children waited up to two weeks for emergency ● Reducing congregate care use; placements. There was a level of care system organized by the level of difficulty of the children, Reducing placement disruptions and and a social worker would fax various agencies at ● the appropriate level of care to try to find a moves (with each additional move, a child placement. SRS was contracting with about 50 typically displays one additional negative agencies around the state. There were no behavior); and benchmarks or rational standards for outcomes. The system was driven by residential care, which ● Focus on outcomes. meant that the children had to go where the beds were located, moving them away from their own homes. The approximately 1,200 foster homes Ms. Markowitz discussed the initial design of were largely provided by SRS. The private the privatized system, beginning with four-year providers supported privatization because the lead contracts with six local providers in 1996. SRS agency model could help address other agencies’ retained investigations, child protection, and needs and better cost knowledge could improve oversight and contracted family preservation, funding. There were challenges during foster care, and adoption. The lead agency model privatization as agencies were being asked to do reduced the number of contracts the state had with things they had not previously done and an providers, allowing lead agencies to subcontract as increased budget was being managed through a necessary. The system was intended to focus on subcontractor network. Despite the challenges, the outcomes related to safety, performance, and well- system improved a great deal, including the data being, rather than just processes, and to generate available and establishment of data-driven timely and accurate data to make decisions and to outcomes. improve the system as experience was gained. Ms. Markowitz reviewed some of the outcomes achieved in the first three years of the privatized Plans and Design for Reform system, including successfully exiting the Ms. Markowitz noted her current role with the settlement agreement, being named the best child Annie E. Casey Foundation (focusing on reforms welfare system in the nation, family preservation for child welfare systems and juvenile justice services available for 100 percent of Kansas systems) and outlined some of the reform counties, a majority of families being preserved, priorities for Kansas’ child welfare privatization adoption increase of 81 percent, significant that continue today, including: increase in foster homes, and all safety indicators being met. ● Access to equal services across the state; Court Perspective ● Stronger partnership with local providers Judge Burgess provided a judicial perspective and promoting innovation; on privatization, noting the courts were not involved in the decision to privatize. Before ● State worker focus on protective services privatization, SRS was struggling to provide the (their strength); necessary services. Privatization was hard work, as

Kansas Legislative Research Department 14-18 2017 Child Welfare System Task Force many new workers immediately entered the ● Needed to involve more stakeholders at system. He sat down with the contractors and laid front end, including the courts and foster out expectations and began meeting every month parents; with the various individuals involved in the system locally to discuss what was working or not Needed better oversight of programmatic working. Judge Burgess stated this kind of ● communication is required to make the complex and financial progress of providers; system work. He noted that contractor stability within a judicial district makes it easier to ● Needed more upfront training of foster maintain communication, and that districts where parents and youth; and the relationship between the court and SRS or the contractor was more adversarial experienced much ● Decision to not do a pilot program was the more difficulty. correct decision.

Financing and Cross-System Implications Ms. Chronister noted the number of children Ms. Howard discussed financing and cross- in the system was likely to continue to rise due to system issues involved with privatization. Because the opioid crisis, and one of the first areas of focus the focus of the new system was managing to going forward should be what resources can be outcomes, it was important the financing design directed toward that crisis. complemented this focus and provided flexibility to contractors for innovation. Financing provisions Positives and Areas for Improvement included an initial case rate of a fixed amount per Identified from 2015 Data child and establishment of a shared risk corridor. There was no direct link between performance and Ms. Markowitz returned to review some payments because there were not yet benchmarks positives and areas for improvement for the for outcomes. The case rate bundled State General Kansas child welfare system based upon data from Fund moneys, federal Title IV-E funds, and federal the 2015 Adoption and Foster Care Analysis and Medicaid funding. Because of limitations on use Reporting System (AFCARS) report. She noted of federal funds, state dollars had to be used for the data is interrelated and often requires a deeper certain innovative services. SRS talked with dive to better understand. For example, when a contractors about how to capture data related to death occurs in the child welfare system, it is outcomes, which helped to establish outcomes to likely that entries into the system will increase and guide contractors. exits will decrease, increasing the number of children in the system, as entities within the Cross-system issues that arose during system err on the side of caution. She noted a privatization included lack of clarity regarding number of strengths for Kansas, including: financial responsibilities for certain services; differences between contractors focused on core ● High rates of placement in family-like outcome measures and other systems with a setting compared to other settings; different focus; and differences in priority populations across systems. ● Low rate of group care placements; and

Insights and Lessons Learned ● Low rate of stays under 30 days (children with such short stays should not enter the Ms. Chronister returned to highlight lessons system in the first place, but note this low learned and insights from the privatization rate will affect Kansas’ overall length of process, including: stay numbers). ● Length of contracts were too short; Ms. Markowitz highlighted some data- ● Needed to define differences between SRS identified areas for more assessment and case manager and provider case manager; improvement in Kansas, including:

Kansas Legislative Research Department 14-19 2017 Child Welfare System Task Force ● Entry and placement rates for African- caseworker; data shows that relative and kinship American children compared to other care is the best practice, is most cost-effective, and ethnic groups; has the best outcomes; there are unique family dynamic impacts that have to be addressed in relative placements that are not present in non- Number of entries double the number of ● relative foster placements; the Annie E. Casey children substantiated for maltreatment (so Foundation has worked with the State of Indiana high there is no comparison nationally); to develop a new child welfare case management system called Casebook, which was implemented ● Entries rising overall and particularly for with the assistance of some federal funding; and ages 6 to 12 (rise in this age range is during privatization, SRS had a task group unique); and working with the children’s rights groups to address the outstanding issues from the settlement ● High number of youth aging out without a agreement and evaluate processes that were permanent family. necessary or not, leading to the development of simpler accountability measures for contractors to meet under privatization. Responses to Questions Mr. Ranney noted privatization was very In response to questions regarding the regular controversial with social workers, which Secretary meetings he held with local system stakeholders, Chronister addressed by holding an open meeting Judge Burgess stated his district also had a local to increase transparency and address questions and permanency planning council, similar to the state concerns. This developed into meetings regularly council, as well as a group focused on difficult held by SRS before the budget proposal and after placements and a group for front-line workers. the legislative session, but they ended under SRS provided a coordinator to help organize these Secretary Rob Siedlecki. meetings. The attendees at the meetings included personnel from DCF, KVC, CASA, local mental In response to a question regarding the health groups, court services officers, and additional $5 million in funding provided in 1989, prosecutors. While there were agendas with issues Ms. Chronister stated the funding was for set for discussion, there also was value in additional social workers. With regard to advice developing lines of communication and trust. He moving forward, Ms. Chronister stated the system stated the judiciary is in the best position to bring must continue to move forward in some way, or the various stakeholders together locally, but the else it will move backwards. Ms. Markowitz stakeholders have to be willing to attend and added that the best place to start is to take a deep participate without feeling forced to do so. The look at the data and look at everything in totality, focus was not on what anyone has done wrong in avoiding anecdotes in favor of qualitative and the past, but what can be improved moving quantitative data. She has offered her assistance to forward. He stated the system must be constantly Acting Secretary Meier-Hummel in this regard. focused on improvement or else it will fall behind. In response to a question regarding the In response to various questions, Ms. oversight initially established for contractors, Ms. Markowitz stated no two states are alike in their Markowitz stated 15 to 20 social workers were approach to licensing and payment for relative and reassigned to oversee the contracts and review kinship care, but her own view is that states should monthly reports that were submitted to be sure pay relatives or kin for placements the State requirements were being timely met. A mistake determines are necessary; technology can help made with the initial contracts was setting improve the efficiency of data entry for social outcomes based around the providers, rather than workers and allow them to focus more on the based around the children in the system, which families on their caseloads; there is a natural break would have increased the investment the state in cases between protection and placement workers had in the system. services that allows for different caseworkers, but the goal should be to maintain the same placement

Kansas Legislative Research Department 14-20 2017 Child Welfare System Task Force Overview: Roles of Department of Health diagnosis, or mental health diagnosis with co- and Environment and Department for Aging occurring disorder. and Disability Services in Child Welfare System As of November 24, 2017, there were 8 licensed PRTFs in Kansas providing a total of 272 Becky Ross, Medicaid Initiatives Coordinator, licensed beds. KDHE, Brad Ridley, Commissioner of Financial and Information Service, KDADS, and Susan Community behavioral health services, Fout, Commissioner of Behavioral Health through a community mental health center or Services, KDADS, presented the Task Force with substance use disorder provider, may be provided an overview of the KDHE and KDADS roles under Medicaid if medically necessary. Services within the child welfare system. also may be provided via private insurance as primary payor. KDHE and KDADS serve two principal roles in the child welfare system: They serve as a payor In response to questions from the Task Force, for medical services, behavioral health and long- the presenters stated the MCOs are for-profit term services and support, and health insurance up entities; there is a staff member assigned to assist to age 27 (if on Medicaid), and they provide aging-out youth in applying for continuing oversight for PRTFs, community behavioral health Medicaid coverage; there is a special procedure services, and home and community based services for children who are reintegrated into a home to (HCBS). apply for Medicaid coverage to continue; KDHE is dependent on DCF for information regarding The departments’ duties in these roles include when a child is being reintegrated from foster care; paying for medically necessary services, including there currently is a waiting list for PRFTs, and HCBS and behavioral health services, through KDHE and KDADS are working with MCOs and MCOs; defining services in state plan and HCBS community mental health centers to try to address waivers; setting policies governing services and that; PRTF beds that are open may not be available minimum rates; and licensing and regulation of to particular youth on the waiting list due to certain providers. specific characteristics of the bed or the youth; there was a change in PRTF business models about Foster children are automatically eligible for 6 or 7 years ago and more out-of-state youth began Medicaid and, if they age-out of the system, they coming in to Kansas PRTFs; one PRTF recently may apply for continuing Medicaid coverage until closed due to financial issues; three PRTFs have age 27. Children adopted from foster care also are recently requested licensing of additional beds, eligible for Medicaid. and some of these additional beds should be available within 60 days; KDADS is starting a There are four HCBS waivers for which foster pilot program with community mental health care children may be functionally eligible: serious centers to begin providing services to children on emotional disturbance (SED), intellectual and the PRTF waiting list; there appears to be a developmental disability (I/DD), autism, and discrepancy in average length of stay numbers for technology assisted (TA) waivers. PRTFs between KDHE and KDADS and the contractors that they will attempt to resolve; KDADS is developing a policy that would require Children in foster care also can receive permission for PRTFs to take out-of-state children, treatment in a PRTF if they are Medicaid-eligible but this is a complex issue; some MCOs may be and it is determined to be medically necessary. conducting screenings for both in-state and out-of- Alternatively, children can receive services via state children; KDADS is trying to develop crisis private insurance as primary payor. PRTFs provide beds for children on the front end and back end of out-of-home treatment when mental health needs PRTF stays to begin offering services while cannot be met in a community setting. These waiting for the PRTF to be available and to help needs may arise from an identified mental health with transition when leaving the PRTF. diagnosis, substance use diagnosis, sexual abuse

Kansas Legislative Research Department 14-21 2017 Child Welfare System Task Force The Vice-chairperson noted that while the served an ex parte order, as their family hid them screening definitions are intended to be consistent or fled before served. One child is a parental across MCOs, in practice, the interpretation and abduction case. There are eight children DCF is application of the definitions appears to differ, and still trying to verify as runaways. DCF has a team this is an area needing additional work. MCOs of staff with law enforcement and military also seem to have affected the changing length of backgrounds that is looking for the children. DCF stays in PRTFs. also is trying to notify law enforcement agencies in other locations if it believes a missing child’s Follow-up Information from November 14 location may have changed. Judge Cahill stated Meeting that one of the important roles of the court is to be sure the policies are being followed for Acting Secretary Meier-Hummel provided a notifications and reporting when a child goes brief overview of her background in the child missing. In response to a question, Judge Cahill welfare system and outlined her initial plans, stated it would be unlikely an ex parte order would priorities, and vision for DCF, including: be withdrawn when a child reaches the age of 18. Acting Secretary Meier-Hummel noted she is ● Transparency with the public, Task Force, going to be discussing border issues with and media; Missouri, including that Missouri will not pick up missing children over the age of 18. ● Leadership role in the Task Force and broader conversation; Acting Secretary Meier-Hummel presented the Task Force with information responding to requests from the November 14 meeting, ● Focus on best practices; including:

● Top-to-bottom review of the agency and ● Information regarding previous conversations with staff, contractors, enforcement of corrective action plans or foster parents, and birth parents; monetary fines against contractors;

● Contract compliance and contractor ● Previous contract renegotiations; performance; ● Data regarding children in foster care who ● Dedicated staff and increased are receiving TANF or Social Security; communication and reporting regarding runaways and other children missing from ● How child support and social security the system; payments are prioritized;

● Increased availability of beds and ● Correlation between children in foster prevention services; care, recent TANF legislation, and child poverty; ● Review of child deaths and similar tragedies; and ● Historical DCF budget information;

● Staff changes. ● Definitions related to relative and kinship care and licensing; and In response to questions about efforts regarding missing children, Acting Secretary ● Placement types utilized by each Meier-Hummel stated there were 79 children contractor. missing as of noon, 65 of which were verified as runaways. Five of the children have never been

Kansas Legislative Research Department 14-22 2017 Child Welfare System Task Force In response to questions, Acting Secretary to determine which testimony should be submitted Meier-Hummel stated she would be reviewing to or heard by the working groups. DCF’s contract management to identify areas for improvement; DCF can open a family services 2018 Schedule Discussion case to provide prevention services to families in non-abuse/neglect cases, as long as the family The Vice-chairperson outlined a proposed agrees; and DCF is going to investigate and structure for 2018 Task Force meetings. The next consider ways to adjust relative placements and meeting would be held February 2, 2018, and licensing to try to access additional federal Title would include a report from the Acting Secretary IV-E funding. on her review of DCF and intended plans for performance improvement, a report from KDHE Other Task Force Business and KDADS on KanCare 2.0 plans for foster care coordination, and an update on promising Facilitator Update practices identified by working groups. The subsequent meeting would be held in mid to late Representative Gallagher reported there has April 2018 for reports and promising practices been conversation regarding contacting Casey updates from working groups and an update on Family Programs or the Council of State legislative activity by KLRD staff. Meetings in Governments to serve as a facilitator for the Task June, August, and October would focus on final Force. She requested guidance from the Task reports from working groups and hearing Force. Judge Cahill suggested contacting Casey testimony as recommended by the working Family Programs to see if it could present groups. Final report discussion would begin at the regarding possible facilitation at the first meeting October meeting, and the report would be finalized in 2018. The Vice-chairperson noted Acting at the December meeting. Secretary Meier-Hummel’s willingness to help obtain a facilitator and requested the Acting Finally, the Task Force moved into discussion Secretary, Representative Gallagher, Judge Cahill, of concerns and recommendations to be included Senator Kelly, and KLRD staff make arrangements in the preliminary report, as detailed in the next to further explore Casey Family Programs’ ability section. to provide facilitation to the Task Force.

Working Group Updates PRELIMINARY FINDINGS AND RECOMMENDATIONS Hina Shah, KHI, presented the Task Force with reports from each working group from the The Task Force discussed concerns and October and November working group meetings. recommendations to be included in the preliminary (Working group reports are attached to this report report. The Vice-chairperson noted Acting as Appendix B.) Ms. Shah noted the working Secretary Meier-Hummel has already announced groups are hoping to have preliminary plans to address many of the concerns, and that the recommendations to the Task Force by July 2018 preliminary report will not be the final report made to provide the Task Force with time to consider the by the Task Force and will not contain an all- working group recommendations and testimony inclusive list of findings and recommendations, and to request any necessary follow-up but could serve as a good guide for the Task Force information. The working groups anticipate the in 2018 and provide information to legislators and testimony application process will be ready in others. January 2018, with testimony focused on the preliminary recommendations developed by the Following discussion, the Task Force working groups, similar to legislative testimony on identified the following concerns regarding the a bill. child welfare system:

The Vice-chairperson and Revisor staff noted ● High turnover levels of social workers due submitted testimony would be reviewed by to stress, excessive caseloads, and low working group chairpersons and vice-chairpersons pay;

Kansas Legislative Research Department 14-23 2017 Child Welfare System Task Force ● Excessive caseloads and limited funding ● Continuity of services and recordkeeping affect timely response for needed services; need improvement so that caseworker turnover does not affect delivery of ● The increasing numbers of children and services; youth who are forced to sleep overnight in child placement agency offices because ● Problems that have led to the closure of there is nowhere else for them to go after several PRTFs for children and youth being removed from their homes; should be addressed so that more PRTFs can be added; ● A significant decrease in number of beds for children and youth in PRTFs in ● DCF should evaluate and explore options Kansas; for combining stand-alone computer systems into a consolidated system, to ● The number of children and youth who are respond to the recent LPA audit and the missing from the State’s child welfare federal Program Improvement Plan. Such system at any given time; consideration should include availability of federal matching funds and the system implemented by Indiana. DCF should ● An antiquated set of various computer provide the Legislature with a clear systems within DCF prevents recommendation for computer system communication between computers within improvement and the Legislature should the DCF, as well as between DCF and the provide the funding required for any two child welfare system contractors; necessary feasibility study;

● Excessive length of time for some ● Prompt adoptions after parental rights are adoptions to be completed after parental terminated, though improving, need rights are terminated; and further attention;

● Lack of additional funding over recent ● Issues regarding youth who run from years for family preservation services. placement should be addressed, including evaluation of what facilities could be used for such youth; The Task Force adopted the following preliminary recommendations: ● There should be consideration of ● A multi-year focus on recruitment and preventative services that could be added retention of social workers should be or increased; implemented, including DCF evaluation of the morale and tenure of the work ● DCF should review the evolution and force; continuum of placements used over the years; and ● Long-term incentives, supports, career path (advancement), professional ● The effect on the child welfare system of development, ongoing training, the consolidation of juvenile services supervision, student loan forgiveness, and within the Kansas Department of competitive compensation for social Corrections should be considered. workers who work in the child welfare system should be developed;

Kansas Legislative Research Department 14-24 2017 Child Welfare System Task Force Appendix A

Child Welfare System Task Force

Working Group Members

General Administration of Child Welfare and Foster Care

Task Force Members:

Sandra Lessor, Chairperson Senator Laura Kelly, Vice-Chairperson Honorable Dan Cahill Dr. Kathy Melhorn Mary Tye

Non-Task Force Members:

Dona Booe Kellie Hogan Kathy Keck Sarah Oberndorfer Loren Pack Susana Prochaska Erin Rainey

Protective Services and Family Preservation

Task Force Members:

Sergeant David Ohlde, Chairperson Representative Jarrod Ousley, Vice-Chairperson Gina Meier-Hummel

Non-Task Force Members:

Sarah Coats Honorable Erika DeMarco Kathleen Holt Connie Mayes Tara Wallace Honorable Taylor Wine Kate Zigtema Gail Cozadd (effective 12/11/2017)

Kansas Legislative Research Department 26 2017 Child Welfare System Task Force Kansas Legislative Research Department 14-25 2017 Child Welfare System Task Force Reintegration and Permanency Placement

Task Force Members:

Alicia Johnson-Turner, Chairperson Representative Linda Gallagher, Vice-Chairperson Mickey Edwards Serena Hawkins Ashlyn Yarnell

Non-Task Force Members:

Charlene Brubaker Bethany Fields Cara Payton Lori Ross Ruth Schenck Nina Shaw-Woody Honorable Kathleen Sloan

Kansas Legislative Research Department 14-2627 2017 2017 Child Child Welfare Welfare System System Task Task Force Force Appendix B

CHILD WELFARE SYSTEMS TASK FORCE MONTHLY REPORT ON WORKING GROUPS: OCTOBER 2017

EXECUTIVE SUMMARY

In October 2017, all three Working Groups met around the October 10th Task Force meeting: • General Administration of Child Welfare and Foster Care met on October 9th—9 of 12 members attended the meeting. • Protective Services and Family Preservation met on October 10th and all 10 members attended the meeting—8 members were present in person and 2 members dialed in via phone. • Reintegration and Permanency Placement met on October 9th and 8 of 12 members attended the meeting—6 members were present in person and 2 members dialed in via phone.

These meetings were focused on introductions, networking, education, knowledge needs, and issue identification.

Each chairperson/vice chairperson worked with the Kansas Health Institute (KHI) to schedule the meeting and prepare meeting agendas.

KHI facilitated brainstorming sessions for two of the three Working Groups to identify issues and knowledge needs (including testimony).

The Working Group on General Administration of Child Welfare and Foster Care invited Dawn Rouse from the Office of Judicial Administration to present information regarding federal mandates as they relate to child welfare statutes and policy.

Two of the three Working Groups requested Kyle Hamilton from the Office of the Revisor of Statutes to discuss the Kansas Open Meetings Act (KOMA)/Kansas Open Records Act (KORA) to their Working Group members.

Kansas Legislative Research Department 14-27 2017 Child Welfare System Task Force

Kansas Legislative Research Department 28 2017 Child Welfare System Task Force CWSTF: Monthly Report on Working Groups for October 2017

GENERAL ADMINISTRATION OF CHILD WELFARE AND FOSTER CARE Meeting Date/Time: October 9, 2017 │ 01:30 – 04:30 PM In-Person Attendees (9): Sandra Lessor (Chair); Senator Laura Kelly (Vice Chair); Judge Dan Cahill; Mary Tye; Dona Booe; Sarah Oberndorfer; Loren Pack; Susan Prochaska; Kathy Keck Remote Attendees: none Unable to Attend (3): Erin Rainey; Dr. Kathy Melhorn; Kellie Hogan Other Attendees (10): Dawn Rouse (presenter); Representative Linda Gallagher; Rachel Marsh; Steve Greene; Samuel Mil Holland; John Paul Grauer; Ben Frie; Donna Frie; Hina Shah; Krista Elliott

MEETING SUMMARY

After introductions, Dawn Rouse, a court improvement specialist from the Office of Judicial Administration presented information on the regarding federal mandates as they relate to child welfare statutes and policy. Throughout her presentation, Ms. Rouse engaged the Working Group in a robust discussion around some of the following topics: o Legislation related to the child welfare system including: ▪ Adoption and Safe Families Act (ASFA) and the Indian Child Welfare Act and discussion focused on provisions for safety, permanency and well-being; ▪ Fostering Connections to Success and Increasing Adoptions Act of 2008 and discussion focused on provisions to support kinship options, reasonable efforts to keep siblings together, coordination with schools to provide stability, and transition plans for older youth; ▪ Preventing Sex Trafficking and Strengthening Families Act (PSTSFA) and discussion focused on provisions for sex trafficking, reasonable efforts to keep siblings together, and normalcy for foster youth; and ▪ Child and Family Service Improvement Act of 2006 and discussion focused on provisions for procedural safeguards with permanency hearings. o State’s ability to choose how to implement this legislation—either by state legislation (CINC code in Kansas) or in a policy and procedure manual (DCF’s PPM); o Compliance of IV-E review by the federal government and qualifications for certain subsidies including a discussion on the penetration rate and funds drawn down; o Reasonable efforts and its role in removal, prevent placement, reunification and permanency plan; o Another Planned Permanent Living Arrangement (APPLA) for youth over age 16 as well as case plans for youth over age 14; and o National Youth Transitional Database, which uses a scoring system to determine the effectiveness of states’ youth transition to adulthood.

After the presentation, the chair discussed the education focus of the initial working group meetings and submission of questions or data requests to the chair and KHI as materials are reviewed. The working group members then engaged in a dialogue on prevention. The discussion entailed prevention services, data, community-based organizations, conducting assessments and other aspects related to prevention. The working group discussed federal law and the idea of Kansas formulating and adopting a value statement.

2 | Page KansasKansas Legislative Legislative Research Research Department Department 14-2829 2017 2017 Child Child Welfare Welfare System System Task TaskForce Force CWSTF: Monthly Report on Working Groups for October 2017

ACTION ITEMS Item Responsible Date due 1. Request Kyle Hamilton to present KOMA/KORA Hina Shah (KHI) 10/18/2017

DECISIONS MADE none

BARRIERS IDENTIFIED none

NEXT MEETING October 18, 2017 at 1:30 PM. Working Group will conduct a brainstorming session along with a review of KOMA/KORA with Kyle Hamilton from the Office of the Revisor of Statutes.

3 | Page KansasKansas Legislative Legislative Research Research Department Department 14-29 30 2017 Child 2017 Welfare Child Welfare System SystemTask Force Task Force CWSTF: Monthly Report on Working Groups for October 2017

PROTECTIVE SERVICES AND FAMILY PRESERVATION Meeting Date/Time: October 10, 2017 │ 03:00 – 05:00 PM In-Person Attendees (8): Sergeant David Ohlde (Chair); Representative Jarrod Ousley (Vice Chair); Gina Meier-Hummel; Sarah Coats; Kathleen Holt; Tara Wallace; Judge Taylor Wine; Kate Zigtema Remote Attendees (2): Judge Erika DeMarco; Connie Mayes Unable to Attend: none Other Attendees (8): Rachel Marsh; Lindsey Stephenson; Steve Greene; Lauren Mendoza; John Paul Grauer; Mitch DePriest; Hina Shah; Krista Elliott

MEETING SUMMARY

After introductions, the chair opened discussion on the 2013 evaluation of DCF’s child protective services function by reviewing the nine recommendations suggested by the Casey Family Programs Assessment in the Performance Audit Report System, Part 1. He highlighted that only one recommendation has been implemented and the need to understand the delay or status of the other recommendations. DCF and its contractors were present and will be prepared to discuss the implementation plan and checklist at future meetings.

The group then discussed other knowledge needs and identified issues relevant to their charge through a quick brainstorming session. This included a robust discussion on the following: • Front-end and investigation intake and processing (Protection Report Center); • Data on non-abuse/non-neglect removals; • Availability of services; • Local standing order/rules versus state and federal laws and policies; • Prevention; and • Solicit best practices from other states.

The group identified the need for testimony from Susan Gile (DCF) to better understand the current system. They have also requested a presentation by Kansas County District Attorneys Association (KCDAA) to understand policies/current practices that impact filing decisions and mitigate risk.

ACTION ITEMS Item Responsible Date due 1. Presentation by Susan Gile Steve Greene (DCF) 11/2/2017 2. Presentation by KCDAA Hina Shah (KHI) 12/4/2017

DECISIONS MADE none

BARRIERS IDENTIFIED none

NEXT MEETING November 2, 2017 at 1:00 PM. Susan Gile from the Kansas Department of Children and Families will present information on Protection Report Center and if time permits, the group will review their brainstorming session and engage in next steps.

4 | Page KansasKansas Legislative Legislative Research Research Department Department 14-3031 2017 2017 Child Child Welfare Welfare System System Task TaskForce Force CWSTF: Monthly Report on Working Groups for October 2017

REINTEGRATION AND PERMANENCY PLACEMENT Meeting Date/Time: October 9, 2017 │ 09:00 AM – 12:00 PM In-Person Attendees (6): Alicia Johnson-Turner (Chair); Representative Linda Gallagher (Vice Chair); Ashlyn Yarnell, Lori Ross, Ruth Schenck, Nina Shaw-Woody Remote Attendees (2): Mickey Edwards, Serena Hawkins Unable to Attend (4): Charlene Brubaker, Bethany Fields, Cara Payton, Judge Kathleen Sloan Other Attendees (9): Rachel Marsh; Steve Greene; Samuel Mil Holland; John Paul Grauer; Ben Frie; Donna Frie; Kyle Hamilton; Hina Shah; Krista Elliott

MEETING SUMMARY

After introductions, the chair requested the Working Group members identify issues in the child welfare system related to their charge (reintegration and permanency placement). Working Group members engaged in an exercise to identify issues and prioritize them. Four broad issues were prioritized: 1. Staff turnover as related to the broader topic of workforce; 2. Older youth; 3. High needs; and 4. Availability of services.

There were some issues identified which may be more relevant for other working groups and KHI has shared these with the chairperson from these groups.

Working Group members then engaged in an exercise to conduct a deeper dive on the four prioritized issues. Working Group members identified knowledge needs and potential testimony requests for each prioritized issue to obtain a better understanding of the breadth and depth of these issues. For example: • During the staff turnover discussion, the underlying challenge may be related to communication flows and understanding workflows and components of a case file may help the group formulate recommendations. • During the older youth discussion, understanding changes as a result of Juvenile Justice Reform and achieving permanency were proposed. Data were also requested on children sleeping in contractor offices (KVC and St. Francis) with a focus on the age of the children.

Only the two prioritized issues listed above were discussed during the meeting due to time.

ACTION ITEMS Item Responsible Date due none

DECISIONS MADE none

BARRIERS IDENTIFIED none

NEXT MEETING November 9, 2017 at 10:00 AM. Working Group will continue the brainstorming exercise with a focus on high needs, substance abuse, services, and cost/funding.

5 | Page KansasKansas Legislative Legislative Research Research Department Department 14-3132 2017 Child 2017 Welfare Child Welfare System System Task Force Task Force CHILD WELFARE SYSTEMS TASK FORCE MONTHLY REPORT ON WORKING GROUPS: NOVEMBER 2017

EXECUTIVE SUMMARY

Leading up to the November 2017 Task Force meeting, all three Working Groups had good attendance: • General Administration of Child Welfare and Foster Care met on October 18th—11 of 12 members were present. • Protective Services and Family Preservation met on November 2nd—all 10 members were present. • Reintegration and Permanency Placement met on November 9th—9 of 12 members were present.

Each chairperson/vice chairperson worked with the Kansas Health Institute (KHI) to schedule the meeting and prepare meeting agendas. These meetings continued to focus on education and brainstorming.

KHI facilitated brainstorming sessions for two of the three Working Groups to identify successes, challenges and opportunities in the Child Welfare system related to their charge on topics like workforce, services, older youth, high needs and cost/funding.

The Working Group on Protective Services and Family Preservation invited Susan Gile from the Kansas Department of Children and Families to present information on the Protection Report Center to the group.

All three Working Groups are beginning to identify gaps in the system and communication flow challenges. KHI will continue to monitor the data requests/questions across all three working groups to minimize duplicative efforts and streamline research requests.

The meetings in December will continue focusing on education as well as brainstorming to determine requests for information and testimony.

Kansas Legislative Research Department 14-32 2017 Child Welfare System Task Force Kansas Legislative Research Department 33 2017 Child Welfare System Task Force CWSTF: Monthly Report on Working Groups for November 2017

GENERAL ADMINISTRATION OF CHILD WELFARE AND FOSTER CARE Meeting Date/Time: October 18, 2017 │ 01:30 – 04:30 PM In-Person Attendees (11): Sandra Lessor (Chair); Senator Laura Kelly (Vice Chair); Judge Dan Cahill; Mary Tye; Dona Booe; Sarah Oberndorfer; Loren Pack; Susan Prochaska; Kathy Keck; Erin Rainey; Dr. Kathy Melhorn Remote Attendees: none Unable to Attend (1): Kellie Hogan Other Attendees (9): Kyle Hamilton (speaker); Rachel Marsh; Lindsey Stephenson; Steve Greene; Samuel Mil Holland; John Paul Grauer; Madeline Fox; Hina Shah; Krista Elliott

MEETING SUMMARY

The meeting began with a presentation by Kyle Hamilton on Kansas Open Meetings Acts (KOMA) and Kansas Open Records Act (KORA) followed by a brief Q&A with members.

Next, KHI facilitated an exercise to identify successes, challenges and opportunities related to the General Administration of Child Welfare and Foster Care. The group completed the exercise on the topics of workforce and services. This exercise encouraged the group to reflect upon what is done well (successes), identify challenges in a rational manner, and seek information on opportunities (e.g., best practices in other states, current pilot projects, etc.). This exercise will then guide the Working Group to develop meaningful and feasible solutions.

Due to the length of time until the next meeting, KHI will disseminate a survey to Working Group members to complete the brainstorming exercise on the topics of cost/funding, technology and communication.

ACTION ITEMS Item Responsible Date due 1. Confirm with Kyle Hamilton whether a survey may Hina Shah (KHI) 11/01/2017 be used as a brainstorming tool between meetings Hina Shah (KHI) 11/09/2017 2. Disseminate survey to members (if approved) Steve Greene (DCF) 12/11/2017 3. Q&A with Dan Lewien (DCF)

DECISIONS MADE none

BARRIERS IDENTIFIED none

NEXT MEETING December 11, 2017 at 1:30 PM. Working Group will review brainstorming results and prioritize data/testimony requests for 2018. Dan Lewien (DCF) will also be present for a Q&A session regarding cost/funding.

Kansas Legislative Research Department 14-33 2017 Child Welfare System Task Force2 | Page Kansas Legislative Research Department 34 2017 Child Welfare System Task Force CWSTF: Monthly Report on Working Groups for November 2017

PROTECTIVE SERVICES AND FAMILY PRESERVATION Meeting Date/Time: November 2, 2017 │ 01:00 – 04:30 PM In-Person Attendees (10): Sergeant David Ohlde (Chair); Representative Jarrod Ousley (Vice Chair); Gina Meier-Hummel, Sarah Coats, Judge Erika DeMarco, Kathleen Holt, Tara Wallace, Kate Zigtema; Judge Taylor Wine; Connie Mayes Remote Attendees: none Unable to Attend: none Other Attendees (9): Rachel Marsh; Lindsey Stephenson; Steve Greene; John Paul Grauer; Mitch DePriest; Samuel Mil Holland; Linda Bass; Hina Shah; Carlie Houchen

MEETING SUMMARY

After a brief introduction, the Chair recognized Susan Giles, Kansas Department of Children and Families (DCF), Administrator – Family and Community Supports to present information on the Protection Reports Center (PRC).

Ms. Giles stated that the presentation she shared is what is used for DCF’s Mandated Reporter Training. The objectives of the presentation were to: • Describe what to expect when calling the Kansas Protection Report Center; • Identify the difference between risk and safety; • Recognize decisions made regarding child safety at different points during DCF involvement, and how risk and safety factors impact these decisions; and • Discover how decisions are made for protective actions and service recommendations.

Through her presentation, Ms. Giles highlighted the policies and regulations that guide social work practice. She described how DCF Policy and Procedure Manual must be in alignment with Kansas Administrative Regulation, Kansas Statutes Annotated and the Federal Child Abuse Prevention and Treatment Act. Some highlights include: • KSA 38-2226 gives DCF’s authority to investigate. DCF has the responsibility to determine the validity of a report and whether any action should be taken to protect the child; • KSA 38-2223, the outlines when mandatory reporters must report. The key language was “reason to suspect.”; • KSA 38-2223(e)(1) and (2), which is a Class B misdemeanor for failure of a mandatory reporter to report; • KSA 38-2224 (a) and (b) that protects employees from termination for making a report. Violation of this is a Class B misdemeanor; and • KSA 38-2213 is an important statute for medical professionals. This statute tells doctors, medical professionals that they can and “shall” give DCF protected medical information.

Ms. Giles also discussed the specific criteria for determining no further action needed. These criteria include that the statutory definition of Child In Need of Care (CINC) or Policy and Procedural Manual (PPM) directives are not met: No indication of harm, report allege abuse or neglect are in the past, report concerns licensing standards only, caregiver’s behavior does not harm a child or place a child in a likelihood of harm or being endangered.

Further, the response times for Non-Abuse/Neglect (NAN) or Family In Need of Assessment (FINA) can be same day, 72 hours or 20 working days. Response times for pregnant woman using substances is 72 hours. Ms. Giles clarified that the 20 working days is currently under revision to change to 7 working days.

Working Group members had several questions along the way which KHI staff noted and will submit to DCF for follow-up. Gaps were also identified such as the lag between the local law enforcement report

3 | Page KansasKansas Legislative Legislative Research Research Department Department 3514-34 2017 2017 Child Child Welfare Welfare System System Task TaskForce Force CWSTF: Monthly Report on Working Groups for November 2017 and the update of registries, and members are interested in understanding how these gaps can be eliminated in the system.

ACTION ITEMS Item Responsible Date due 1. Presentation on Risk Mitigation by KCDAA Hina Shah (KHI) 12/04/2017 2. Q&A with Dan Lewien (DCF) Steve Greene (DCF) 12/04/2017

DECISIONS MADE none

BARRIERS IDENTIFIED none

NEXT MEETING December 4, 2017 at 1:00 PM. The group will review the questions submitted and invite the following speakers: representatives from KVC and St. Francis, state contractors for Family Preservation Services; representative from KCDAA on Risk Mitigation; and Dan Lewien (DCF) to discuss cost/funding.

4 | Page KansasKansas Legislative Legislative Research Research Department Department 14-3536 2017 Child 2017 Welfare Child Welfare System SystemTask Force Task Force CWSTF: Monthly Report on Working Groups for November 2017

REINTEGRATION AND PERMANENCY PLACEMENT Meeting Date/Time: November 9, 2017 │ 10:00 AM – 3:00 PM In-Person Attendees (8): Alicia Johnson-Turner (Chair); Representative Linda Gallagher (Vice Chair); Ashlyn Yarnell, Lori Ross, Ruth Schenck, Nina Shaw-Woody, Mickey Edwards, Charlene Brubaker Remote Attendees (1): Cara Payton, Unable to Attend (3): Bethany Fields, Judge Kathleen Sloan, Serena Hawkins Other Attendees (9): Steve Greene; Lindsey Stephenson; John Paul Grauer; Mitch DePriest; Margarita Carlson; Natalie Nelson; Madeline Fox; Hina Shah; Krista Elliott

MEETING SUMMARY

KHI facilitated an exercise to identify successes, challenges and opportunities related to Reintegration and Permanency Placement based on the prioritized topic identified during their October meeting.

The group completed the exercise on the topics of workforce, older youth, high needs and services. This exercise encouraged the group to reflect upon what is done well (successes), identify challenges in a rational manner, and seek information on opportunities (e.g., best practices in other states, current pilot projects, etc.). This exercise will then guide the working group to develop meaningful and feasible solutions.

Due to the length of time until the next meeting, KHI will disseminate a survey to Working Group members to complete the brainstorming exercise on the topics of services, cost/funding, technology and communication.

ACTION ITEMS Item Responsible Date due 1. Disseminate Survey to members Hina Shah (KHI) 11/16/2017

DECISIONS MADE none

BARRIERS IDENTIFIED none

NEXT MEETING December 6, 2017 at 10:00 AM. The group will review brainstorming results and discuss other research and testimony requests.

Kansas Legislative Research Department 14-36 2017 Child Welfare System Task 5Force | Page Kansas Legislative Research Department 37 2017 Child Welfare System Task Force CHILD WELFARE SYSTEMS TASK FORCE MONTHLY REPORT ON WORKING GROUPS: DECEMBER 2017

EXECUTIVE SUMMARY

Leading up to the December 2017 Task Force meeting, all three Working Groups had good attendance: • General Administration of Child Welfare and Foster Care met on December 11 th-1 O of 12 members were present. • Protective Services and Family Preservation met on December 4th-9 of 10 members were present. • Reintegration and Permanency Placement met on December 6th-9 of 12 members were present. Each chairperson/vice chairperson worked with the Kansas Health Institute (KHI) to schedule the meeting and prepare meeting agendas. These meetings continued to focus on education and brainstorming. All three working groups held a Q&A session with Dan Lewien, Office of Financial Management Director for the Kansas Department of Children and Families (DCF).

The working group on Protective Services and Family Preservation also heard testimony from DCF's contractors on family preservation services and from the Kansas County and District Attorneys Association (KCDAA) on case filings and the role of local regulations. The other two working groups completed a surveybetween meetings to continue brainstorming to identify successes, challenges and opportunities in the Child Welfare system related to their charge on the topics of cost/funding, communication, services and technology. KHI compiled the results and led exercises to prioritize information and testimony requests and begin developing a preliminary list of recommendations.

KHI will continue to monitor the data requests/questions across all three working groups to minimize duplicative efforts and streamline research requests. The meetings in 2018 will focus on the development of recommendations. The working groups would appreciate direction from the Task Force on a meeting schedule for 2018, developing recommendations and soliciting testimony.

Kansas Legislative Research Department 14-37 2017 Child Welfare System Task Force Kansas Legislative Research Department 38 2017 Child Welfare System Task Force CWSTF: Monthly Report on Working Groups for December 2017

GENERAL ADMINISTRATION OF CHILD WELFARE AND FOSTER CARE Meeting Date/Time: December l l, 2017 I 01 :30- 04:30 PM In-Person Attendees (9): Sandra Lessor (Chair); Senator Laura Kelly (Vice Chair); Judge Dan Cahill; Mary Tye; Dona Booe; Sarah Oberndorfer; Loren Pack; Susan Prochaska; Dr. Kathy Melhorn Remote Attendees (1): Kathy Keck Unable to Attend (2): Kellie Hogan: Erin Rainey Other Attendees (8): Rachel Marsh; Becky Fast; Dawn Rouse; Jordan Milholland; John Paul Grauer; Unknown female; Hina Shah; Carlie Houchen

MEETING SUMMARY

Prior to the meeting, this working group completed a brainstorming survey identifying successes, challenges and opportunities for the topics of cost/funding, technology, and communication. KHI compiled the results and disseminated them during the meeting. After a brief introduction, the working group discussed high-level goals to inform next steps-an administrative approach to topics such as workforce, oversight, licensing, communication across agencies and entities, organizational structure, court timelines and transition planning for older youth.

Next, KHI reviewed the brainstorming survey results with the working group and led an exercise for each topic area resulting in a list of exploration areas. The group also identified information/data and testimony requests. Following are a few examples of preliminary recommendations, requests for information and requests for testimony.

Examples of Exploration Areas > Statewide database with varying levels of access > Address communication barriers between agencies and entities > Mechanism to widely disseminate the Foster Care Bill of Rights > Centralized, shared record of available foster homes and matching placement opportunities > Sustainable workforce through accountability, manageable caseloads and adequate funding Examples of Information/Data Requests > Federal requirements to build child welfare case management system from the Capacity Building Center for the Court (CBCC) and Capacity Building Center for States (CBCS) > Budgets and contracts from all agencies and entities to review funding streams > Structure and oversight of DCF and its contractors Examples of Testimony Requests > Representatives from Child Advocacy Center of Sedgwick County and Child Death Review Board on communication models

After a short break, the Chair recognized Dan Lewien (DCF) for a Q&A session with working group members on costs, budgets and funding. Working group members had several questions related to the social security funds, child support, prevention fund caps, IV-E funds, shrinkage and workforce.

The meeting wrapped up with a discussion on scheduling for 2018 and the working group will await direction from the Task Force.

ACTION ITEMS Item Responsible Date due l. Schedule speakers for upcoming meetings Hina Shah (KHI) TBD 2. Send information/data requests to appropriate Hina Shah (KHI) TBD a encies Kansas Legislative Research----- Department·------14-38------2017 Child Welfare- System Task Force 21 Pa ge Kansas Legislative Research Department 39 2017 Child Welfare System Task Force CWSTF: Monthly Report on Working Groups for December 2017

DECISIONS MADE none

BARRIERS IDENTIFIED No scheduled meetings in 2018.

NEXT MEETING To be determined.

Kansas Legislative Research Department 14-39 2017 Child Welfare·----·------System Task Force 31 Page Kansas Legislative Research Department 40 2017 Child Welfare System Task Force CWSTF: Monthly Report on Working Groups for December 2017

PROTECTIVE SERVICES AND FAMILY P R E S E R V A T I O N Meeting Date/Time: December 4, 2017 I 01 :0 0- 0 4: 45 PM In-Person Attendees (9): Sergeant David Ohlde (Chair); Representative Jarrod Ousley (Vice Chair); Sarah Coats; Judge Erika DeMarco; Kathleen Holt; Tara Wallace; Kate Z i g t e m a ; Judge Taylor Wine; Connie Mdyes Remote Attendees: none Unable to Attend (1 ): Gina Meier-Hummel Other Attendees (24): Linda Bass; Amanda Pfannenstiel; Shawna Lyon; Rachel' Marsh; Tionna Haberman; Lindsey Stephenson; Deneen Dryden; Tom Buell; Leslie Hale; Charlene Brubaker, Erica Hunter; Dan Lewien; Don Hymer; Ron Paschal; Madeline Fox; Kari Presley; Steve Kearny; Natalie Nelson; J o h n Paul Grauer: Mitch DePriest; Ben Frie; Donna Frie; Hina Shah; Carlie Houchen

MEETING SUMMARY

After a brief introduction, the Chair recognized Linda Bass, Vice President of KVC Kansas, as well as Amanda Pfannenstiel, Corporate Clinical Director, and Shawna Lyon, Director of Family Preservation, both of Saint Francis Community Services. The presentation began with the number of family preservation allocations for FY 2018 (July 2017-June 2018). The presenters also discussed net referrals to date, an overview of the family preservation pr o gr am including the referral process, assessments and case planning. The contractors discussed a number of interventions an d the models at their respective organizations, an d e n de d their presentation with outcomes data for measures like families engaged timely an d babies born substance free.

Working group members had a robust discussion with the presenters an d asked several questions related to staff turnover, caseloads, training and education requirements, after-hours services, parental rights, billing, intensive versus less intensive efforts an d associated transitions, an d trauma and mental health assessments an d s e r v i c e s . Members also discussed the impact of substance abuse on family preservation needs. KHI staff also no ted questions from working group members for DCF and will submit for follow-up.

Next, the Chair re co gni ze d representatives from the Kansas County & District Attorney Association {KCDAA)-Charlene Brubaker {Ellis County); Don Hymer {Johnson County); and Ron Paschal {Sedgwick County). The presentation began with the following statement:There are 105 c o u n t i e s an d at l e a s t 105 ways to do things in child welfare cases. The working group had a robust r o u n d t a b l e discussion with the attorneys on case filings, training, removals associated with substance abuse, necessary case information, role of law enforcement, accountability an d prior substantiations. The role of local regulations versus state-wide standardization was also discussed.

La st ly , the chair re cog ni ze d Dan Lewien (DCFJ for a Q&A session with working group members on costs, budgets and funding related to family preservation. Due to time restraints, t h e r e were limited discussions around TANF funds an d multi-generational funding, tobacco settlement, funding for mental health services an d referral transfers due to funding caps.

ACTION ITEMS Item Responsib le Date due 1. Schedule speakers for upcoming meetings Hina Shah (K HI) TBD 2. Send information/data requests to appropriate Hina Shah (KHI) TBD a enc ies

41Pa g e Kansas Legislative Research Department 14-40 2017 Child Welfare System Task Force Kansas Legislative Research Department 41 2017 Child Welfare System Task Force CWSTF: Monthly Report on Working Groups for December 2017

DECISIONS MADE none

BARRIERS IDENTIFIED No scheduled meetings in 2018.

NEXT MEETING To be determined.

Kansas Legislative Research Department------· 14-41 2017 Child Welfare System Task Force 51Page Kansas Legislative Research Department 42 2017 Child Welfare System Task Force CWSTF: Monthly Report on Working Groups for December 2017

REINTEGRATION AND PERMANENCY PLACEMENT Meeting Date/Time: December 6, 2017 I 10:00 AM-3:00 PM In-Person Attendees (6): Alicia Johnson-Turner (Chair); Representative Linda Gallagher (Vice Chair); Ruth Schenck; Charlene Brubaker; Judge Kathleen Sloan; Serena Hawkins Remote Attendees (3): Cara Payton; Ashlyn Yarnell; Lori Ross Unable to Attend (3): Bethany Fields; Ni na Shaw-Woody; Mickey Edwards Other Attendees (11): Dan Lewien; Lindsey Stephenson; Rachel Marsh; John Paul Grauer; Mitch DePriest; Natalie Nelson; Madeline Fox; Ben Frie; Donna Frie; Deneen Dryden; Hina Shah; Carlie Houchen

MEETING SUMMARY

Prior to the meeting, this working group completed a brainstorming survey identifying successes, challenges, and opportunities for the topics of cost/funding, services, technology and communication. KHI compiled the results and disseminated them during the meeting. After a brief introduction, the Chair recognized Dan Lewien (DCF) for a Q&A session with working group members on costs, budgets and funding related to reintegration and permanency. M e m b e r s had several questions related to location of foster homes, social security, kin/relative monies and after care.

The working group then developed a value statement to guide next steps: Timely and sustained permanency taking into consideration the age of the child. Access to a p p r o p r i a t e and necessary services for family as they work towards reintegration and meeting the n e e d s of the child.

Next, KHI reviewed the brainstorming survey results with the working group and led an exercise for each topic area resulting in a list of preliminary recommendations as well as identification and prioritization of information/data and testimony requests. F o l l o w i n g are a few examples of preliminary recommendations, requests for information and requests for testimony.

Examples of Preliminary Recommendations � Thoughtful training on the role of the foster parent at the outset of placement and implementation of co-parenting techniques � Addressing the needs of o l d e r youth in transition in the s ys t em � Need f o r m e n t a l health services for foster care youth � Efficiencies in transportation needs � Effective communication strategies amongst all stakeholders-looking closely at schools, guardian ad litem (GAL), court services officers (CS0s) and case managers � Updating technology particularly for placements-ideas around a portal Examples of Information/Data Requests � Funding mechanism f o r after care; � E x a m p l e case transfer form; � PRTF queue and funding; and � Payment for kinship placements in other states Examples of Testimony Requests � Beth Gonzalez (DCF) on core competency training; � Shane Heit (KVC Health S y s t e m s ) on waiver services; � Julie Brewer (United Community Services of Johnson County) on transitioning youth; and � Don Hymer (KCDAA) on impact of Juvenile Justice Reform on Foster Care

The meeting wrapped up with a discussion on scheduling for 2018 and the working group will await direction from the Task Force. ·------6IPage Kansas Legislative Research Department 14-42 2017 Child Welfare System Task Force Kansas Legislative Research Department 43 2017 Child Welfare System Task Force CWSTF: Monthly Report on Working Groups for December 2017

ACTION ITEMS Item Responsible Date due l. Schedule speakers for upcoming meetings Hina Shah (KHI) TBD 2. Send information/data requests to appropriate Hina Shah (KHI) TBD agencies

DECISIONS MADE none

BARRIERS IDENTIFIED No scheduled meetings in 2018.

NEXT MEETING To be determined.

---·------Kansas Legislative Research Department 14-43 2017 Child Welfare System Task Force71 Page Kansas Legislative Research Department 44 2017 Child Welfare System Task Force OTHER COMMISSIONS, COMMITTEES, AND TASK FORCES

Report of the Health Care Stabilization Fund Oversight Committee to the 2018 Kansas Legislature

CHAIRPERSON: Gary Hayzlett

LEGISLATIVE MEMBERS: Senators Laura Kelly and Vicki Schmidt; and Representatives Eber Phelps and Richard Proehl

NON-LEGISLATIVE MEMBERS: Darrell Conrade, Dennis George, Dr. Jimmie Gleason, and Dr. James Rider (two health care provider provisions are vacant)

CHARGE

This Committee annually receives a report on the status of the Health Care Stabilization Fund and makes recommendations regarding the financial status of the Fund.

December 2017 Health Care Stabilization Fund Oversight Committee

ANNUAL REPORT

Conclusions and Recommendations

The Health Care Stabilization Fund Oversight Committee considered two items central to its statutory charge: whether this committee should continue its work and whether a second, independent analysis of the Health Care Stabilization Fund (HCSF or the Fund) is necessary. This oversight committee continues in its belief that the Committee serves a vital role as a link among the HCSF Board of Governors, the health care providers, and the Legislature and should be continued. Additionally, the Committee recognizes the important role and function of the HCSF in providing stability in the professional liability insurance marketplace, which allows for more affordable coverage to health care providers in Kansas. The Committee is satisfied with the actuarial analysis presented and did not request the independent review.

The Committee considered information presented by the Board of Governors’ representatives, including its required statutory report, the Board of Governors’ actuary, and health care provider and insurance company representatives. The Committee agreed on the following recommendations and comments:

● Actuarial report and health of the HCSF; provider surcharge rate recommendations. The Committee notes the report provided by the Board of Governors’ actuary reviewed the financial performance of the HCSF and outlined positive indicators, including a strong balance sheet and a solid income statement. The actuary reviewed options considered by and the recommendation made by the Board, which will result in a decrease in most surcharge rates for health care providers. The actuary indicated this rate reduction, a decline of about 2.6 percent from calendar year 2017 rates, will become effective January 1, 2018.

○ The Committee supports continued monitoring of indicators associated with enactment of 2014 law, including the relative loss experience among provider classes and rating by years of compliance for tail coverage. (As a result of 2014 law, tail coverage for inactive health care providers became effective immediately upon inactivation of the provider license and cancellation of professional liability insurance coverage.)

○ The Committee appreciates the constant effort on behalf of the Board of Governors and its staff to monitor the cash balance of the HCSF. The Committee notes the laddered investment strategy prescribed by statute and delegated to the Director of Investments at the Pooled Money Investment Board, which allows the Board of Governors to maintain its fiduciary duty as protector of the fiscal integrity of the Fund and its statutory duty to assure sufficient liquidity to pay claims in a timely manner.

● Reimbursement of the HCSF. The Committee notes the fulfillment of the reimbursement schedule established by 2010 SB 414. This law allowed for

Kansas Legislative Research Department 15-1 2017 Health Care Stabilization Fund Oversight reimbursement of deferred payments to the HCSF for administrative services provided to the self-insurance programs at the University of Kansas (KU) Faculty and Foundations and the University of Kansas Medical Center and Wichita Center for Graduate Medical Education (WCGME) residents for state fiscal years 2010, 2011, 2012, and 2013. The Committee notes normal reimbursements occurred starting July 1, 2013, and 20 percent of the accrued receivables (totaled $7,720,422.23 on June 30, 2013) were paid each July 1, pursuant to the statutory schedule. The final payment of $1,544,084.45 was received on July 1, 2017.

● Telemedicine and locum tenens. The Committee recognizes two contemporary issues of concern to the Board of Governors and Kansas health care providers. The Committee notes information presented by the Board of Governors and discussed with health care provider representatives and the Board’s decision that non-resident telemedicine providers and locum tenens should be held to the same standards of accountability as any Kansas resident health care provider and, therefore, should be required to comply with the Health Care Provider Insurance Availability Act (HCPIAA). The Committee further notes the Legislative Coordinating Council assigned telemedicine legislation to the 2017 Special Committee on Health for its consideration and recommendations.

● Health Care Provider Insurance Availability Act. The Committee notes no amendments to this Act were submitted for its consideration.

● Fund to be held in trust. The Committee recommends the following language to the Legislative Coordinating Council, the Legislature, and the Governor regarding the HCSF:

○ The Health Care Stabilization Fund Oversight Committee continues to be concerned about and is opposed to any transfer of money from the HCSF to the State General Fund (SGF). The HCSF provides Kansas doctors, hospitals, and the defined health care providers with individual professional liability coverage. The HCSF is funded by payments made by or on behalf of each individual health care provider. Those payments made to the HCSF by health care providers are not a fee. The State shares no responsibility for the liabilities of the HCSF. Furthermore, as set forth in the HCPIAA, the HCSF is required to be “held in trust in the state treasury and accounted for separately from other state funds”; and

○ Further, this Committee believes the following to be true: All surcharge payments, reimbursements, and other receipts made payable to the HCSF shall be credited to the HCSF. At the end of any fiscal year, all unexpended and unencumbered moneys in such Fund shall remain therein and not be credited to or transferred to the SGF or to any other fund.

Proposed Legislation: None

BACKGROUND industry representative; 1 person from the general public at large, with no affiliation with health care The Committee was created by the 1989 providers or with the insurance industry; and the Legislature and is described in KSA 2017 Supp. Chairperson of the HCSF Board of Governors or 40-3403b. The 11-member Committee consists of another member of the Board designated by the 4 legislators; 4 health care providers; 1 insurance Chairperson. The law charges the Committee to report its activities to the Legislative Coordinating

Kansas Legislative Research Department 15-2 2017 Health Care Stabilization Fund Oversight Council (LCC) and to make recommendations to a solid income statement, with the latter allowing the Legislature regarding the Health Care the HCSF to lower most surcharge rates that will Stabilization Fund (HCSF or the Fund). The become effective January 1, 2018. The actuary reports of the Committee are on file in the indicated there will be an overall rate reduction of Legislative Research Department. about 2.5 percent from CY 2017 rates.

The Committee met October 2, 2017. The actuary reviewed the HCSF’s liabilities at June 30, 2017. The liabilities highlighted included claims made against active providers as $75.4 COMMITTEE ACTIVITIES million; associated defense costs as $13.3 million; claims against inactive providers, as known on Report of Willis Towers Watson June 30, 2017, as $7.9 million; tail liability of inactive providers as $128.1 million; future The Willis Towers Watson actuarial report payments as $9.8 million; claims handling as $8.1 serves an addendum to the report to the Board of million; and other, which is mainly plaintiff Governors dated March 6, 2017, provided to the verdicts on appeals, as $2.2 million. Total gross HCSF Board of Governors based on HCSF data as liabilities were $244.8 million; the HCSF is of December 31, 2016. The actuary addressed reimbursed $8.4 million for the KU/WCGME forecasts of the HCSF’s position at June 30, 2017, programs, for a final net liability of $236.4 and June 30, 2018, based on the company’s annual million. The actuary stated the gross liabilities review, along with the prior estimate for June includes the KU/WCGME claims without 2017. The HCSF’s position at June 30, 2017, was reimbursement, explaining that if there should be as follows: the HCSF held assets of $285.87 another situation in which those reimbursements million and liabilities of $236.42 million, with were held temporarily, the vulnerability to the $49.45 million in reserve. The projection for June HCSF is $8.4 million. The actuary further 30, 2018, is as follows: assets of $290.41 million, discussed the tail liability of inactive providers, liabilities of $240.95 million, with $49.45 million noting this amount is difficult to estimate and has in reserve. The actuary stated the forecasts of grown due to the 2014 change in law that allowed unassigned reserves assume an estimate of any provider who has been in the HCSF to be surcharge revenue in fiscal year (FY) 2018 of covered for claims after the provider becomes $28.1 million, a 2.0 percent interest rate for inactive. The actuary explained the liability is estimating the tail liabilities on a present-value recognized today even though those claims may basis, a 3.1 percent yield on HCSF assets for not occur for another 10 to 20 years or paid for estimating investment income, continued full another 20 to 30 years. reimbursement for University of Kansas/Wichita Center for Graduate Medical Education The actuary also reviewed the HCSF’s rate (KU/WCGME) (generally referred to as the level indications for CY 2018, noting the residents in training program) claims, and no indications assume a break-even target. The change in current Kansas tort law or HCSF law. actuary highlighted payments, with settlements The actuary noted, based on the analysis provided and defense costs of $29.63 million; change in to the Board of Governors in March, the HCSF liabilities of $5.49 million; administrative could reduce its calendar year (CY) 2018 expenses of $1.81 million; and transfers to the surcharge rates by 2.0 percent and still maintain its Health Care Provider Insurance Availability Act unassigned reserves at approximately $50 million. (HCPIAA) Availability Plan and the Kansas It was also suggested the Board of Governors Department of Health and Environment assumed consider a modest reduction in rates for CY 2018, at $200,000 (this amount assumes no transfer to perhaps by continuing to lessen the difference in the Availability Plan); in total, the cost for the rates by years of compliance (YOC) and making HCSF to “break even” for another year is $37.12 adjustments by specialty. million. The actuary stated the HCSF has two sources of revenue: an investment income The actuary stated the company remains assumption of $8.80 million based on a 3.1 percent pleased with the HCSF’s financial performance yield on those assets; and surcharge payments both in terms of having a strong balance sheet and from providers of $28.32 million. The actuary also

Kansas Legislative Research Department 15-3 2017 Health Care Stabilization Fund Oversight noted, if the Board of Governors did nothing with and second-year rate from the company’s its surcharge rates, it is believed the HCSF would perspective to attract new providers to the state. have collected more than that at $28.86 million. Therefore, there would be a negative rate level The actuary provided an overview regarding indication, which provides an opportunity to lower indications by provider class. This report indicates rates overall to the providers for CY 2018; the the analysis of experience by HCSF class Board of Governors chose to do so. (Note: see continues to show differences in relative loss information on indications by provider class for experience among classes. The actuary explained the surcharge rates approved by the Board.) In the rate structure of the HCSF and the different response to a Committee member’s questions classes that are charged and segregated for each about administrative expenses, the Executive type of health care provider, stating from an Director for the Board of Governors clarified those outside actuarial perspective, the goal is having expenses would include routine state operations each class stand on its own (equitable rates across such as salaries, rent, fees to the Office of the classes, rather than one class subsidizing Information Technology, and other similar state another class’ loss experience). The actuary noted agency operating expenses such as human more classes are in the middle range for loss resources support. experience (an increase or decrease of less than 15 percent). Classes with decreases or increases The actuary discussed trends in the HCSF’s greater than 15 percent are noted below: loss experience and investment income indicating the HCSF has had a remarkably favorable ● Decrease greater than 15 percent: Class 13 situation regarding the inflation in its business, (registered nurse anesthetists); Class 8 because basically it has been 0 for about 13 years. (surgery specialty – general, plastic, The actuary provided an assumption of going emergency room with major); Class 24 forward at a 210 basis point spread (that is (nursing facilities); Class 18 (mental assuming an investment yield of 3.1 percent and health centers); and Class 3 (physicians, inflation of 1.0 percent). He then reported on minor surgery); and trends in the HCSF’s experience for active and inactive providers by program year and also Increase greater than 15 percent: Class 9 reported on the HCSF’s investment yield, ● indicating it continues to show a gradual decline. (surgery specialty – cardiovascular, The actuary indicated his company may have to orthopedic, traumatic); Class 11 (surgery lower the assumption from 3.1 percent when it specialty – neurosurgery); Class 22 (nurse completes its review in a few months. midwives); and Class 15 (Availability Plan insureds). The actuary provided an overview on the rating by YOC. With the enactment of 2014 HB Committee discussion topics included 2516, the HCSF provides tail coverage at no differences between classes, with some classes’ additional cost to all providers upon becoming rates set as a dollar amount, while other provider inactive. He stated that changed the amount to be classes pay a percentage-based rate. The actuary charged to providers who are new to the system noted Classes 1 through 14 pay set dollar amounts; versus the amount charged before. The actuary Classes 15 and above pay a percentage of the indicated the HCSF Board of Governors has underlying basic coverage premium that these moved over the past few years to normalize those providers pay for the first $200,000. For example, rates by YOC. He stated now the rate for a new a nurse midwife, Class 22, paying $10,000 in provider is up to 35 percent of the rate for premium for a basic coverage policy would pay someone who has been in for 5 years, up from the HCSF 38 percent of that $10,000. The actuary only 20 percent 3 years ago. The actuary indicated commented the percentage rate would be based on he is comfortable the Board has made a lot of what the underlying insurance company is progress on this issue and may be able to retain the charging, not a set dollar amount. It was noted current rate for a year or two. The actuary stated established loss experience would be needed he can see the benefits of having a lower first-year before some current percentage-based rates could transition to set dollar amounts. The discussion

Kansas Legislative Research Department 15-4 2017 Health Care Stabilization Fund Oversight also included the Availability Plan insureds and to address requirements and exclusions from this class’ loss experience. The Executive Director coverage pertaining to the liability of the HCSF for the Board of Governors explained the and charitable providers and certain exempt Legislature chose to have a relationship between licensees of the Board of Nursing. Further the HCSF and the Availability Plan where, if the comment was provided by the Executive Director Availability Plan experiences losses in a particular for the Board of Governors. fiscal year, money is transferred from the HCSF to the Availability Plan to offset those loses. If, Chief Counsel’s Update however, the Availability Plan collects more premiums than it suffers in losses, then they The Deputy Director and Chief Counsel for transfer that surplus to the HCSF. The Availability the Board of Governors addressed the FY 2017 Plan guarantees all health care providers, as medical professional liability experience (based on defined in HCPIAA, will have access to the basic all claims resolved in FY 2017, including layer, $200,000 per claim, $600,000 annual judgments and settlements). Of the 16 cases aggregate, basic coverage. involving 23 Kansas health care providers tried to juries during FY 2017, 14 were tried to juries in The actuary provided both a history of Kansas courts and 2 cases were tried in Jackson surcharge rate changes since 2004 and an County, Missouri. The trials were held in the overview of the three options for CY 2018 following jurisdictions: Johnson County (5); surcharge rates that were provided to the Board of Saline County (3); Brown County (1); Cloud Governors. The actuary highlighted the Board of County (1); Cowley County (1); Douglas County Governors’ decision on the surcharge rate changes (1); Sedgwick County (1); Wilson County (1); and and indicated the estimated overall impact of these Jackson County, Missouri (2). Of those 16 cases changes to be a 2.6 percent decrease in surcharge tried, 14 resulted in defense verdicts, including revenue. In response to a Committee question, the both tried in Jackson County, Missouri. actuary indicated this will be the fourth year the rate changes take place on January 1. He explained The Chief Counsel noted 2 more cases went to that historically surcharge rates were determined trial than during the previous year, but the number on a July 1 to June 30 basis. of trials has gone down in the past 15 to 20 years. She indicated that in FY 2018 to date, two cases Comments have gone to trial and further stated, over the next few years, more cases are likely to be filed in In addition to the report from the HCSF Board Missouri due to the KU Hospital Authority and the of Governors’ actuary, the Committee received KU Cancer Center having a number of clinics in information from Committee staff detailing Missouri. resource materials provided for its consideration, including a bill summary from the Kansas The Chief Counsel highlighted the claims Legislative Research Department (KLRD) and settled by the HCSF, noting in FY 2017, 64 claims copy of the enrolled version of 2017 HB 2118 (L. in 53 cases were settled involving HCSF moneys 2017, ch. 35); an updated memorandum on the and describing FY 2017 as an “average year.” HCSF and medical malpractice law; information Settlement amounts incurred by the HCSF for the from the KLRD Appropriations Report detailing fiscal year totaled $21,745,583; the primary the approved Board of Governors’ expenditures insurance carriers contributed $11,057,500 to these for FY 2017, FY 2018, and FY 2019, including claims. In addition, excess insurance carriers any recommendations the Governor made or provided coverage for 4 of these claims for a total changes to the budget on the Governor’s behalf of $1,425,000. So, for these 64 claims involving and on the Legislature’s behalf; and the the HCSF, the total settlement amount was Committee’s conclusions and recommendations $34,228,083. The Chief Counsel noted this is 12 contained in its most recent annual report. fewer cases and about $1.8 million less than in the previous fiscal year. She stated it was a good year Committee staff briefly highlighted HB 2118, in terms of the total amount of settlements, but it is which amended and created law supplemental to always important to keep in mind the severity of the HCPIAA and amended the Nurse Practice Act claims and settlements. The Chief Counsel noted

Kansas Legislative Research Department 15-5 2017 Health Care Stabilization Fund Oversight that in FY 2017, 13 claims were in the “large” coverage in the HCSF would provide coverage. category of settlement over $600,000. Of the 64 She added that previously when WCGME claims in which the HCSF is involved, 8 involved residents wanted to assist with a disaster in another inactive health care providers for which the HCSF state, they were told if their program declared the has first-dollar coverage. In addition to the residents’ assistance in that area as part of their settlements involving HCSF contributions, the residency training program, they would be covered HCSF was notified primary insurance carriers if any claims arose from providing assistance in settled an additional 82 claims in 74 cases. The those areas. Responding to a question about claims total amount of these reported settlements was payment and resolution, the Chief Counsel $8,622,021. The Chief Counsel’s testimony also indicated a primary carrier may determine a claim included a historical report of HCSF total is beyond $200,000 and will tender its limits to the settlements and verdicts, from FY 1977 to FY HCSF. The HCSF will continue with the defense 2017. She stated, in addition to the $21,745,583 in of the case, most often with the same attorney, and settlements, there was one verdict for $800,000 continue with the defense until resolution of the from the HCSF, totaling 65 claims this past year case, whether it goes to trial or is settled. She involving $22,545,583 from the HCSF. noted, on occasion, some health care providers, usually hospitals, will have coverage in excess of The Chief Counsel also reported 276 new HCSF. The Chief Counsel also indicated there are cases during FY 2017. She indicated from FY instances when it is determined a claim needs to 2009 to FY 2014 there was a five-year decrease in be resolved and the HCSF Board of Governors the number of claims and since then a small determines the claim would more than likely increase. She stated the increase was to be exceed the HCSF’s $800,000 coverage and the expected due to the 2014 Legislature adding five $200,000 that was tendered to the HCSF; in those new categories of health care providers under the circumstances, the Board of Governors will tender HCSF coverage provisions in the HCPIAA: onto the excess insurance carrier. physician assistants, nurse midwives, nursing homes, assisted living facilities, and residential The Chief Counsel addressed the self- health care facilities. The Chief Counsel reported insurance programs and reimbursement for the KU claims are starting to come in on the added health Foundation and Faculty program and medical care providers. For FY 2017, there were 28 more residents. She stated the FY 2017 KU Foundations cases than for FY 2016. The Chief Counsel and Faculty program incurred $2,673,879 in indicated 27 new claims were in regard to adult attorney fees, expenses, and settlements; $500,000 care homes and pointed out the increase in the came from the Private Practice Reserve Fund and number of new claims was mostly due to the new $2,173,879 came from the State General Fund health care providers and stated, considering this (SGF). The Chief Attorney indicated the $2.7 factor, there has not really been an increase in the million was an increase from the past several years number of new claims this past year. primarily because of the number of settlements; there were ten settlements involving KU full-time In response to a Committee question, the faculty members this past year. That compares to Chief Counsel indicated health care providers that four the year before and seven in 2015. This past live in Kansas are covered wherever they may year there were two big cases involving a number practice. She noted a health care provider who of KU providers in these claims, accounting for lives in Kansas and practices in Missouri must pay $1.0 million of the $1,730,000 in settlements. The an additional 30 percent surcharge due to claims Chief Counsel noted, with more settlements, there tending to be higher; the Missouri tort laws are not will be increased attorney fees and expenses; these as favorable as those in Kansas. She stated some expenses increased about $300,000 this past year. health care providers practice in Nebraska, Oklahoma, or Colorado and indicated there is no In regard to the self-insurance programs for additional surcharge for practicing in those states. the residents in training at the KU Medical Center In response to a question, the Chief Counsel stated in Kansas City and affiliated programs in Wichita doctors helping in disaster areas are covered by the and Salina, there have not been any settlements for HCSF; if there were any claims from health care the past couple of years involving residents. For providers who go out of state, their primary the third year in a row, there has been a decrease in

Kansas Legislative Research Department 15-6 2017 Health Care Stabilization Fund Oversight the total amounts spent on these programs of Medical Malpractice Insurance $642,342. However, for FY 2018, the Chief Marketplace; Update on Availability Counsel reported, at least two settlements Plan involving residents for $400,000 are already anticipated. The President and CEO for the Kansas Medical Mutual Insurance Company (KaMMCO) The Chief Counsel report also listed the indicated the marketplace in Kansas and across the historical expenditures by fiscal year for the KU country is pretty healthy and stable. He stated Foundations and Faculty and the residents in many companies are writing this business and training. The Chief Counsel indicated the ten-year rates are at all-time lows. The KaMMCO conferee average for the faculty self-insurance program is indicated the companies are well-capitalized and, about $1.6 million, which is running above the while the results are not quite as good as they were historical average. For the residency program, that a few years ago, overall the industry is profitable ten-year average is about $862,000, which for four and, as a result, there is no difficulty in finding years has been below average. She also provided coverage for most lines of professional liability information about moneys paid by the HCSF as an insurance. The conferee highlighted two excess carrier, stating for those claims involving marketplace concerns: more claims being filed and the KU faculty members, the HCSF paid more complex cases, along with more obstetrical $1,766,666 out of its excess coverage. The Chief claims. He provided approximate numbers of Counsel stated $1.5 million of that came from one those in the HCPIAA Availability Plan large case. She anticipates next year that amount (Availability Plan): 201 either MDs or DOs; 31 will decrease. corporations or other types of providers; 3 hospitals; 4 long-term-care facilities; 10 other She next addressed the reimbursement of facilities, such as surgical centers; and 35 expenses for administrative services provided by moonlighting residents (mostly covering rural the Board of Governors noting, in 2010, the emergency rooms, according to the conferee). In Legislature reached a compromise (SB 414; L. response to a Committee question about a separate 2010, ch. 55) that for four fiscal years (FY 2010, plan for moonlighting residents, the Executive FY 2011, FY 2012, and FY 2013), the HCSF Director clarified that residents in training are self- would not be reimbursed. Beginning with FY insured by the State of Kansas and do not have a 2014, two things would occur: quarterly basic policy in place. reimbursements were to begin and, for five fiscal years (FY 2014 through FY 2018), the HCSF was The KaMMCO conferee also provided an to be reimbursed 20 percent of the accrued outlook for the industry, stating this is a very receivables for those four years the HCSF was not robust, competitive market, and he believes it is reimbursed. At the end of June 30, 2013, the going to stay that way for a while. The conferee amount of accrued receivables was $7,720,422.23 addressed some of the things KaMMCO will be for which the HCSF had not been reimbursed. The watching that can have an impact on the industry Chief Counsel indicated that on July 1, 2017, and the HCSF, such as the Affordable Care Act, which was the beginning of FY 2018, the fifth and the Medicare Access and CHIP [Children’s Health final installment payment was received. Insurance Program] Reauthorization Act, and the opioid crisis in America and Kansas, described as In response to Committee questions regarding the next set of professional liability insurance attorney fees, the Chief Counsel stated there are litigation. The conferee discussed his perspective claims in which a lot of money is spent to defend on the health care provider groups that asked to the case, and then the case is dismissed. She come into the HCSF a few years ago following indicated most cases that are filed are dismissed Miller v. Johnson, and what drove them to seek and do not go to settlement, but those cases still coverage by the HCSF. The conferee concluded by need defended. The Chief Counsel stated the noting it is a pretty stable industry environment attorney fees listed are to defend all claims that and has been that way for a number of years, have been made against the Foundations and benefiting health care providers. Faculty program or residents, not just those that went to trial or resulted in settlement.

Kansas Legislative Research Department 15-7 2017 Health Care Stabilization Fund Oversight In response to a question regarding support for the operation of the HCSF and success telemedicine, the KaMMCO conferee stated he of the public-private partnership established under does not think there is enough experience yet to the HCPIAA. The testimony supported the learn all the ramifications. He indicated KaMMCO continuation of the Committee and indicated a will have to wrestle with the policy questions of separate, independent actuarial analysis was not what to do when care is being provided outside of necessary. The testimony also indicated support state borders and what that means in terms of not for the Fund’s investment strategy and payment of just compliance with the HCSF but where liability claims in a timely manner. for those acts or omissions may land. He stated the KaMMCO will pay close attention and be part of Board of Governors’ Statutory Report the conversation. A Committee member noted telemedicine is similar to mail-order pharmacies The Executive Director provided the Board of where out-of-state pharmacists provide all the care Governors’ statutory annual report (as required by an in-state pharmacist does. The member indicated KSA 2016 Supp. 40-3403(b)(1)(C)). These were the issue was addressed, and the providers must be among the items detailed in the FY 2017 report: licensed in the state to which the medication is being delivered or where the patient resides. The ● Net premium surcharge revenue member stated it is a similar path of continuity of collections amounted to $28,121,164. The care and taking care of the patient. There was lowest surcharge rate for a health care some discussion regarding the opioid crisis and the provider was $100 (for a first-year health care community, including restriction of the provider, opting for lowest coverage days’ supply and upcoming studies, including one option) and the highest surcharge rate was conducted by the Kansas Hospital Association. $16,510 for a neurosurgeon with four or The KaMMCO conferee indicated everyone in the more years of HCSF liability exposure health care community views this as something for (selecting the highest coverage option). which they all have roles in trying to help fix. Application of the Missouri modification factor for this Kansas resident Comments from Health Care Provider neurosurgeon (if licensed in Missouri) Representatives would result in a total premium surcharge of $21,463 for this health care The Executive Director of the Kansas Medical practitioner; Society (KMS) commented that HCPIAA is doing exactly what it was intended to do: provide ● The average compensation per settlement stability and structure to health care malpractice (53 cases involving 64 claims were coverage for Kansas physicians. He noted the settled) was $339,775. These amounts are present is a time of active change, reform, and in addition to compensation paid by upheaval in the practice of medicine. He stated primary insurers (typically $200,000 per Kansas physicians sincerely appreciate the claim). The report states amounts reported stability and the leadership demonstrated not only for verdicts and settlements were not by the Legislature but by the Oversight Committee necessarily paid during FY 2017 and total to provide stability for this environment. The KMS claims paid during the fiscal year conferee urged the continuation of this Committee, amounted to $23,976,127; and noting the Committee sees trends over periods of time and issues that might be coming, and it has the foresight and experience to be able to act on ● The balance sheet, as of June 30, 2017, those. He also stated KMS does not see the need indicated total assets of $286,690,985 and for an additional actuarial service. The KMS total liabilities of $238,059,073. conferee concluded by stating the KMS encourages a continuation of the Committee in its The Executive Director provided a brief current structure. history of the HCPIAA and its three principal features that remain intact: a requirement that all Written testimony submitted by the Kansas health care providers, as defined in KSA 2016 Association of Osteopathic Medicine stated Supp. 40-3401, maintain professional liability

Kansas Legislative Research Department 15-8 2017 Health Care Stabilization Fund Oversight coverage; creation of a joint underwriting those providers should be required to comply with association, the “HCPIAA Availability Plan”, to the HCPIAA. provide professional liability insurance coverage for those health care providers who cannot The Executive Director discussed the HCSF’s purchase coverage in the commercial insurance cash-flow management, stating it is important to market; and creation of the HCSF to provide keep in mind the statutory obligation to pay claims excess coverage above the primary coverage in a timely manner. He also stated the Board of purchased by health care providers and to serve as Governors carefully watches the cash balance to reinsurer of the Availability Plan. ensure enough cash is on hand to pay those claims that the Chief Counsel has identified must be paid The Executive Director also provided an within the succeeding couple of weeks. The update regarding 2017 HB 2118 that clarifies, if an Executive Director stated the Board of Governors incident giving rise to a medical malpractice claim makes a diligent effort to ensure sufficient is the result of professional services rendered by a surcharge revenue is collected, so it will never charitable health care provider (as defined in the experience unfunded liabilities. He highlighted the Kansas Tort Claims Act), or if the claim is covered Board of Governors’ investment strategy and under the Federal Tort Claims Act, the HCSF is related statutory requirementlls (KSA 2016 Supp. not liable. He indicated the law also allows the 40-3406; KSA 2016 Supp. 40-3403(a)), noting commercial insurance carriers to exclude coverage investments are laddered over a ten-year period to for such claims in their basic insurance policies. assure reliable cash flow. He also commented in The Executive Director stated the Board of support of maintaining this conservative Governors is unaware of any problems or flaws in investment strategy as the Board has a fiduciary the 2017 bill that need to be addressed by the duty to protect the fiscal integrity of the Fund. His Legislature in the 2018 Session. testimony indicated the Board does not believe the Legislature should amend this investment law to The Executive Director highlighted allow the Board to pursue higher risk investments. contemporary issues for the Board of Governors and health care providers—telemedicine and HCPIAA Amendments locum tenens—commenting on two distinct concerns: organizations employing physicians to No amendments were brought before the provide online medical care directly to consumers Committee. or via provider participation agreement with health insurers (telemedicine) and companies offering to provide temporary physician staffing support. He CONCLUSIONS AND RECOMMENDATIONS noted the Board of Governors has made its one- page nonresident certification form as simple as The Committee considered two items central possible and allows proration of the annual to its statutory charge: whether this committee surcharge if a nonresident works in Kansas part- should continue its work and whether a second, time or on an intermittent basis. For Kansas independent analysis of the HCSF is necessary. resident health care providers who are employed This oversight committee continues in its belief by either telemedicine or locum tenens companies, that the Committee serves a vital role as a link professional liability insurance coverage must be among the HCSF Board of Governors, the health obtained in compliance with the HCPIAA (the care providers, and the Legislature and should be insurance carrier must be approved to sell such continued. Additionally, the Committee recognizes coverage) or the provider must choose to change the important role and function of the HCSF in his or her Kansas license to inactive status. The providing stability in the professional liability Executive Director indicated these topics have insurance marketplace, which allows for more been discussed with the Board of Governors and affordable coverage to health care providers in ultimately it decided that non-resident Kansas. The Committee is satisfied with the telemedicine providers and locum tenens should be actuarial analysis presented and did not request the held to the same standards of accountability as any independent review. Kansas resident health care provider and therefore,

Kansas Legislative Research Department 15-9 2017 Health Care Stabilization Fund Oversight The Committee considered information liquidity to pay claims in a timely presented by the Board of Governors’ manner. representatives, including its required statutory report, the Board of Governors’ actuary, and health ● Reimbursement of the HCSF. The care provider and insurance company Committee notes the fulfillment of the representatives. The Committee agreed to make reimbursement schedule established by the following recommendations and comments: 2010 SB 414. This law allowed for reimbursement of deferred payments to ● Actuarial report and health of the the HCSF for administrative services HCSF; provider surcharge rate provided to the self-insurance programs at recommendations. The Committee notes the KU Faculty and Foundations and the the report provided by the Board of KU Medical Center and WCGME Governors’ actuary reviewed the financial residents for FY 2010, FY 2011, FY 2012, performance of the HCSF and outlined and FY 2013. The Committee notes positive indicators including a strong normal reimbursements occurred starting balance sheet and a solid income July 1, 2013, and 20 percent of the statement. The actuary reviewed options accrued receivables (which totaled considered by and the recommendation $7,720,422.23 on June 30, 2013) were made by the Board, which will result in a paid each July 1, pursuant to the statutory decrease in most surcharge rates for health schedule. The final payment of care providers. The actuary indicated this $1,544,084.45 was received on July 1, rate reduction, a decline of about 2.6 2017. percent from CY 2017 rates, will become effective January 1, 2018. ● Telemedicine and locum tenens. The Committee recognizes two contemporary ○ The Committee supports continued issues of concern to the Board of monitoring of indicators associated Governors and Kansas health care with enactment of 2014 law, including providers. The Committee notes the relative loss experience among information presented by the Board of provider classes and rating by YOC Governors and discussed with health care for tail coverage. (As a result of 2014 provider representatives and the Board’s law, tail coverage for inactive health decision that non-resident telemedicine care providers became effective providers and locum tenens should be held immediately upon inactivation of the to the same standards of accountability as provider license and cancellation of any Kansas resident health care provider professional liability insurance and, therefore, should be required to coverage.) comply with the HCPIAA. The Committee further notes the LCC assigned ○ The Committee appreciates the telemedicine legislation to the 2017 constant effort on behalf of the Board Special Committee on Health for its of Governors and its staff to monitor consideration and recommendations. the cash balance of the HCSF. The Committee notes the laddered ● HCPIAA. The Committee notes no investment strategy prescribed by amendments to this Act were submitted statute and delegated to the Director for its consideration. of Investments at the Pooled Money Investment Board which allows the Board of Governors to maintain its ● Fund to be held in trust. The Committee fiduciary duty as protector of the recommends the following language to the fiscal integrity of the Fund and its LCC, the Legislature, and the Governor statutory duty to assure sufficient regarding the HCSF:

Kansas Legislative Research Department 15-10 2017 Health Care Stabilization Fund Oversight ○ The Health Care Stabilization Fund “held in trust in the state treasury and Oversight Committee continues to be accounted for separately from other concerned about and is opposed to any state funds” (KSA 2016 Supp. 40- transfer of money from the HCSF to 3203(a)); and the SGF. The HCSF provides Kansas doctors, hospitals, and the defined ○ Further, this Committee believes the health care providers with individual following to be true: All surcharge professional liability coverage. The payments, reimbursements, and other HCSF is funded by payments made by receipts made payable to the HCSF or on behalf of each individual health shall be credited to the HCSF. At the care provider. Those payments made end of any fiscal year, all unexpended to the HCSF by health care providers and unencumbered moneys in such are not a fee. The State shares no Fund shall remain therein and not be responsibility for the liabilities of the credited to or transferred to the SGF HCSF. Furthermore, as set forth in the or to any other fund. HCPIAA, the HCSF is required to be

Kansas Legislative Research Department 15-11 2017 Health Care Stabilization Fund Oversight